Alexander Pasechnik

Head of the Analytical Department of the National Energy Security Fund

The leader of Turkmenistan Gurbanguly Berdimuhamedov spoke at the Consultative Meeting of the heads of Central Asian states. After greeting the Presidents of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan who arrived in Turkmenistan, he continued to talk mainly about aspects of cooperation in the energy sector. In particular, the President noted that “the partnership in the energy sector should be implemented through the active and full-scale participation of all Central Asian states without exception, and it should be aimed at creating a powerful energy infrastructure both within the region and along its external perimeter”.

Taking into account the hydrocarbon potential of Turkmenistan (the country ranks fourth in terms of natural gas reserves in the world), it is logical to foresee that the strategy of the state authorities will be increasingly closely associated with the accelerated monetization of this “natural capital”. Turkmenistan’s potential opportunities for diversifying the export of “blue fuel” are connected with the connection to the supply of the completed TANAP system-the Trans-Anatolian gas pipeline (through the construction of the trans-Caspian gas pipeline from Turkmenistan to Azerbaijan), as well as to the TAPI gas pipeline project, the discussion on which is now being updated in connection with the change of the political regime in Afghanistan, where in mid-August power in the country passed to the Taliban (the Taliban movement is banned in the Russian Federation).

But these potential cases for the development of gas transportation infrastructure require a serious system analysis. Thus, the opportunities for exporting Central Asian gas to the European market under TANAP may be limited. First of all, multibillion-dollar investments in the trans-Caspian underwater pipeline are necessary for their implementation. And for example, the European Investment Bank stops financing projects related to fossil fuels after 2021. Finding an alternative investment channel is not an easy task for them.

In addition, Turkmenistan’s plans to develop the pipeline infrastructure and direct its gas to the European market also look late due to the fact that the European Union has been noticeably accelerating in terms of energy transition in recent years: decarbonization goals suggest reducing natural gas consumption in the long term. This increases the risks of implementing new capital-intensive energy projects for gas transportation. And such powerful strategic systems of Gazprom as the working Turkish Stream and the Nord Stream-2 planned for launch this year leave almost no chance for projects of new gas delivery routes to Europe.

At the same time, the positions of suppliers of liquefied natural gas (LNG) are also strengthening in the European market. Therefore, the consideration of the possibility of exporting Turkmen gas to Europe is a big question. Especially when the basic direction of export of Turkmen gas — to China-is working very successfully and developing. And there is no special competition with Russian gas here yet, since the Turkmen “blue fuel” covers the demand of the western provinces of the Middle Kingdom, and the supply of Russian gas through the Power of Siberia pipeline meets its demand in the eastern part of China. Moreover, all the prerequisites for the fact that the Chinese gas market can only add to the capacity, given the grandiose strategic plan of the Chinese authorities to reduce the share of coal generation in the energy balance of the republic at the expense of mainly natural gas. Another thing is that when working out the second route for the delivery of gas from Russia to China – “Forces of Siberia – 2” – Gazprom should take a closer look at the export energy strategy of Turkmenistan.

As for the long-planned infrastructure project for the transportation of gas — the Turkmenistan — Afghanistan — Pakistan-India pipeline (TAPI), the official representative of the Qatari political office of the Taliban movement, Mohammad Sohail Shaheen, said in an interview with Sky News on August 17 about the interest in implementing it. This project for Turkmenistan can become an important stage in the strategy of the country’s authorities to diversify gas exports. In this connection, the scenario with the possibility of the “Pakistan Stream” (the planned pipeline through the territory of Pakistan from the southern seaports to the northern provinces) to receive Turkmen pipe gas from TAPI is hypothetically revived. This makes the reverse mode of operation of the Pakistani system preferable. That is, the initial bid of LNG producers for an additional sales niche in Pakistan may not play if the main system is loaded from the northern entrance, and not from the southern LNG terminals. But Russia, if the “Pakistani Stream” is connected to TAPI, will have the opportunity to make money on Pakistani transit.

However, China can quite expect to prove itself as an opponent of TAPI, since Turkmen gas now mainly enters the Middle Kingdom through the three-line cross-border main gas pipeline “Turkmenistan — Uzbekistan-Kazakhstan-China”. At the same time, the strategic efforts of the parties are aimed at expanding pipeline capacities: the fourth branch of the system — “D” – has long been in the development phase. But Turkmenistan simply will not have the opportunity to simultaneously increase gas production so quickly to load both TAPI and the planned “D” highway. Beijing does not want a scenario with the “diversion” of Turkmen gas volumes to TAPI, taking care of improving its own energy security.

In addition to setting goals for geographical diversification of natural gas supplies, the Turkmen authorities are also puzzled by the increase in the marginality of energy exports. An important event in the life of the country was the commissioning at the end of June of a new enterprise for the production of high-conversion products from natural gas. The opening ceremony of the plant for the production of synthetic gasoline from natural gas (GTL-plant), built in the Akhal velayat (formerly the Ashgabat region), was attended by the leader of Turkmenistan. Although this is not the first GTL plant in the world, but here, for the first time in world practice, the distillation of natural gas into liquid fuel under high pressure and at high temperatures will be carried out in industrial volumes. The annual processing nominal value of the enterprise is almost 1.8 billion cubic meters of gas.