EU bets on Turkmenistan for Trans-Caspian pipeline

Turkmenistan and the European Union have signed a memorandum of understanding on energy and discussed an impact assessment of the EU-backed Trans-Caspian pipeline, a new route for Central Asian gas that bypasses Russia. The memorandum follows similar agreements with Azerbaijan, Kazakhstan and Ukraine.
“It is a first towards an energy dialogue, even an energy partnership in the future,” Ferran Tarradellas Espuny, spokesman for EU Energy Commissioner Andris Piebalgs told New Europe, adding that “it’s historical because it has never been done before.” There was no legal framework and now the memorandum is a first step towards better cooperation in the field of energy.
Piebalgs discussed an impact assessment for the Trans-Caspian pipeline with Turkmen President Gurbanguly Berdimuhamedov, the EU energy spokesman said. “They had the opportunity of talking about that bilaterally. He discussed about this when he was going to the inauguration of a new compression station and the Turkmens look favourably to the development of this infrastructure,” he said. Baku hosts the start of a gas pipeline — the South Caucasus Pipeline — which pumps gas to Turkey where it is transported further on to Europe. But a major issue is how to transport Turkmen gas to the start of the pipeline.
Turkmen gas could reach Baku not necessarily through the Trans-Caspian pipeline but also by ship. And there is a pipeline that exists already that goes through Iran. But given the world issues with Tehran, this is unlikely, Tarradellas Espuny said. The leaders of Azerbaijan and Turkmenistan met for the first time in 12 years on May 19, boosting Europe’s hopes for the Trans-Caspian pipeline.
Turkmenistan and Azerbaijan are central to the EU’s plans to reduce its energy reliance on Russia which supplies a quarter of Europe’s needs. Piebalgs also hopes that Turkmen gas will feed the EU-backed project, Nabucco. The Azeri and Turkmen leaders agreed to develop a transport corridor on May 19. They also discussed disputed oilfields in the Caspian Sea. The EU energy spokesman said the meeting between Azerbaijan and Turkmenistan is “a positive movement.”
Both the Azeri and Turkmen leaders said they wanted to improve relations and diversify their export routes — a natural move, analysts said. The vast majority of Turkmenistan’s gas currently travels north to Europe through Russia’s network of pipes. The meeting increases the likelihood of the Caspian pipeline project moving forward, analysts said. The five Caspian littoral states have a big dispute over where the borders are drawn between five different states. “If you look at the oil prices, they just hit 130 dollars, the amount of money they are leaving on the table every day by not coming to an agreement and getting oil and gas moving is pretty large.
I’d say high oil prices are a strong stimulus for them to go out and get the thing done,” Ron Smith, chief strategist at Moscow’s Alfa Bank, told New Europe. Turkmenistan — which some analysts have estimated could hold one of the world’s biggest gas reserves — has also made recent deals with Russia. Last year the Central Asian states agreed to build a new pipeline to pump gas north to Russia.
The big question is whether Turkmenistan has enough gas to supply Russia, China and the EU. “That’s an open question actually: How much there is because Gazprom itself is trying to source a fair amount of gas out of the region overall, not just from Turkmenistan, but until they actually produce it and being secretive enough it’s difficult for an outside analyst to say if they can actually do it,” Smith said.