As negotiations with Russia for regional export projects have failed, Turkey is working with other partners and moving forward on plans to form a regional natural gas export hub.
Turkey and Azerbaijan’s recent agreement to enable delivery of Turkmenistan natural gas to Europe displayed the two countries' commitment to help Europe replace Russian pipeline imports with alternative supplies.
The agreement excluded Iran from the planned transit route. Turkey and Azerbaijan would expand capacity of several natural gas pipelines to facilitate Turkmen fuel transit into Turkey and then to Europe.
Access to Turkmenistan’s huge natural gas reserves would be a bonus for Europe and Turkmenistan. Several planned pipeline projects to link the continent with Turkmen reserves, however, have often stalled, including the 180-mile, 36-inch diameter Trans-Caspian Gas Pipeline between Turkmenistan and Azerbaijan.
China is currently the largest importer of Turkmen natural gas, as Turkmenistan’s biggest development prospect, the Galkynysh field, is in the southeastern part of the country. It is closer to the Chinese border than the Turkish border and far from the Caspian Sea.
Akos Losz, senior research associate at Columbia University’s Center on Global Energy Policy, told NGI it is also not clear whether there would be much of a market for additional Turkmen natural gas on the other side of the Caspian after 2030.
“Gas production is increasing in Azerbaijan, Turkey and Romania, while Greece, Italy, and Croatia have been adding LNG import capacity ahead of an expected liquefied natural gas market glut through the early 2030s,” Losz said.
At the same time, the European Union’s (EU) Green Deal and REPowerEU plan are aiming to reduce natural gas consumption significantly through 2030 and beyond. This would leave the market environment for projects like the Trans-Caspian pipeline drastically different from 20 years ago, when the project was first proposed.
In 2022, Azerbaijan agreed to nearly double natural gas exports to Europe to 20 billion cubic meters (Bcm) annually by 2027. Last year, Azerbaijan exported almost 24 Bcm of gas to Georgia, Turkey and Europe, with the latter receiving 11.8 Bcm of natural gas from Azerbaijan. Exports this year are forecast to rise to 12 Bcm.
Losz said it is “highly implausible” that Azerbaijan could export 20 Bcm/year of gas to the EU by 2027. Delivering that sort of volume would require development of Azerbaijan’s upstream development prospects at an accelerated pace. Meanwhile, the expansion of the entire Southern Gas Corridor is still in a preliminary stage.
Additionally, the level of interest in signing new long-term contracts from the European side has been modest so far, Losz explained.
“A partial increase in Azeri gas exports to Europe by the end of the decade and a full ramp-up to 20 Bcm by the early 2030s seems more feasible, though still very challenging.”
