[Premium]: EC Sees Turkmen gas by 2020 – but How?
A top European diplomat says the EU expects to receive the first Turkmen gas via the Southern Gas Corridor (SGC) in 2020. The head of the EU delegation to Turkey and Turkmenistan, Christian Berger, told Azerbaijani magazine Caspian Energy that the EU continues to work with Turkmenistan, as well as on its plan to diversify gas export routes, particularly towards the EU, which will expand the SGC by ensuring the delivery of the first volumes of gas to the EU in 2020.
The 3,500-km SGC is expected to start in late 2020, transporting 16.18bn m³ of Azerbaijan’s Shah Deniz phase 2 (SD2) gas to Turkey and Europe. If it is to carry more gas, new compressor stations are needed. The final capacity of the pipeline is 31bn m³/yr, expected to be realised in early 2030s.
None of the shareholders of three segments of SGC – South Caucasus Pipeline (SCP), Trans Anatolian pipeline (Tanap) and Trans Adriatic pipeline (TAP) – has yet signed a contract with Turkmenistan over gas transit.
The other problem is how to deliver Turkmen gas to Azerbaijan or Turkey. Iran and Russia are against laying pipes in Caspian Sea until there is a binding agreement between the five littoral countries on the legal status of sea. The other route would be overland across Iran, which started swapping 1.5bn m³/yr gas with Turkmenistan in October 2016, getting gas in northeast and delivering the same amount in the northwest to Azerbaijan. However, recently Iran announced that it is only allowing Turkmen gas to flow to Azerbaijan or Armenia, not to Turkey and other markets. Turkmenistan stopped gas export to Iran in January 2016 owing to $1.8bn of unpaid bills.
The diplomat recalled that the conclusions of the Council for the Strategy of the European Union in Central Asia (CA), approved in June 2017, emphasised that the EU will continue to strive for the expansion of SGC in central Asia and continue to promote multilateral and bilateral energy co-operation with the countries of the region.
“It is necessary to continue discussing the conditions for Turkmenistan's accession to this corridor, including at the next bilateral meeting on this issue in Ashgabat at the end of this year,” the diplomat said.
NGW’s Ilham Shaban, a specialist in the Caspian region, told Caspian Energy that in order for Turkmen gas to flow through SGC, an agreement on the purchase and sale of Turkmen gas between European companies and gas producers in Turkmenistan as well as an agreement with SGC shareholders is needed.
He also said that for transiting more than 16.18bn m3/y of initial capacity, it is necessary to build additional pump-and-compressor stations on SGC, and this requires new billions of investments.
On the other hand, the Turkmen gas fields are in the east of the country, about 1,000 km away from the Caspian. Turkmenistan has built some pipelines but not for more than 5bn m³/yr, while profitable deliveries would mean shipping at least 10bn m³/yr.
One possible solution that has been suggested would be to lay a pipeline linking offshore platforms in the Turkmen sector with those in the Azeri sector, although that too apparently breaches the the understanding of the five states. Turkmenistan does not market its gas abroad, selling it at the country's border, mostly to China.