The debate over the Trans-Caspian Pipeline is currently one of the major topics of discussion once more. On April 25–26, 2024, the Turkmen team, led by Deputy Minister Ahmet Gurbanov, conducted extensive political discussions with their Turkish counterparts while on a business visit to Ankara. The focus of the talks was on strengthening bilateral ties, notably in the political, economic and cultural spheres. It was also highlighted how crucial it is to carry out the agreements made at recent high-level fora, especially when it comes to energy cooperation. Previously, a letter of intent and a memorandum of understanding (MoU) were signed on March 1 by Turkmenistan and Türkiye, to enhance their collaboration in the natural gas industry. Theoretically, this seems to be a positive development for the two countries as well as for the European continent.
It should be noted that Turkmenistan holds the key to initiating the Trans-Caspian Gas Pipeline (TCP) project. So far, Turkmenistan, as a resource-owner country, has not approached any known proposals to start the project. For the project to move forward, critical considerations include funding sources, especially in light of European restrictions on fossil fuel financing, and the logistics of integrating this new supply into the already full Southern Gas Corridor infrastructure. On the other hand, aiming to secure its energy future and improve its geopolitical stature, it seems that Turkmenistan is interested in the TCP. Turkmenistan’s Foreign Ministry has emphasized the TCP’s economic justification, viability and potential to considerably increase Eurasia’s energy security on July 20.
On the other hand, the TCP was once again named as a project of common interest in the European Commission’s 2019 paper on energy security. Türkiye wants to become a major transit nation and hub for energy distribution, and Azerbaijan wants to achieve both goals in terms of transit income and energy security. The support of the consumers, together with this confluence of interests, fosters a favorable climate for possible advancement.
It should be noted that this project aims to create an underwater pipeline for Turkmen natural gas to join the European energy market. It takes into account the interests of transit countries and guarantees Turkmen natural gas users in Europe consistent access to resources. Discussions of bringing Caspian energy resources to international markets have their origins in the fall of the Soviet Union. After this historic occurrence, interest in the energy resources of the region increased, leading to discussions about finding other ways to transport these resources through alternative routes. Notwithstanding these conversations, Azerbaijan’s oil and gas pipelines continued to be the dominant source of regional energy transportation diversification. Turkmenistan’s goal of using a pipeline under the Caspian Sea to deliver its huge natural gas reserves to profitable European markets is the driving force behind its proposal for the TCP. The proposed pipeline would connect Baku and Turkmenbashi, covering approximately 300 kilometers (over 185 miles), and would be smoothly integrated with the Southern Gas Corridor. By facilitating the smooth flow of Turkmen gas into the European energy market, this integration would increase energy sourcing diversity.
As noted, there are certain obstacles in the way of this vision’s implementation in the geopolitical and economic spheres. The main obstacle among these is Turkmenistan’s ability to produce sufficient gas. Despite having large gas reserves, there are concerns that the country’s present production levels may not allow it to supply the TCP with enough gas. This emphasizes the necessity to increase production capacity while also coordinating it with the anticipated needs of the TCP. The TCP project may face financial challenges as a result of the drop in gas prices around the world, which was sparked by oil price fluctuations. With an estimated investment requirement of $5 billion, securing financing for the pipeline’s construction becomes a critical issue. The economic feasibility is intrinsically linked to market dynamics and global energy prices.
A path to regional energy cooperation
The development of the TCP has been long overshadowed by geopolitical factors. The TCP has succeeded in gaining political backing from European consumers in spite of obstacles, which is indicative of larger geopolitical and energy security concerns. It is noteworthy that the majority of the European countries have stated that they want to see the TCP come to pass. This position is best illustrated by a letter from a former U.S. president to Turkmenistan’s president, in which he expressed hope about the project’s future after the legal status of the Caspian Sea was clarified. Key stakeholders’ cooperation and coordination have also been essential to the TCP project’s advancement. In 2015, Turkmenistan, Azerbaijan and Türkiye signed the Ashgabat Declaration with the European Union indicating support for the effort on a regional level. Turkmenistan’s increased interaction with international partners sets it apart from its past tendency toward overreliance on its energy exports.
Even if there are certain obstacles along the way, the TCP’s success might signal revolutionary changes to the energy environment for both Europe and Turkmenistan. The importance of the TCP is growing as the world community fervently strives to improve energy security, reduce reliance on particular energy providers and investigate alternate supply channels. The success of the project depends on the careful interaction of environmental, geopolitical and economic variables. Cooperation between international parties is required. The successful construction of the TCP may be remembered as a turning point in Turkmenistan’s energy history and as a major step toward diversifying Europe’s energy supply as the dynamics of the world energy market continue to change.
Despite impediments arising from geopolitical dynamics, economic feasibility and regional energy dynamics, the project holds significant potential for diversifying energy supply routes to Europe. But realizing a project requires complex agreements, evaluations, monetary pledges and multilateral agreements. It has the potential to reshape the movement of Caspian energy resources, ensuring long-term access to raw materials for European consumers and contributing to a diversified and secure energy future for the Eurasian region. To sum up, the TCP project is a difficult yet intriguing project that has attracted interest from various stakeholders around the world.
Ayaz Museyibov is advisor to the executive director at Azerbaijan’s Center for Analysis of Economic Reforms and Communication
