The ongoing Ukraine Crisis, the impact of which is felt on a global scale, confirms that the revision of energy policies implemented by countries is a matter of economic security. Of course, it is clear enough that the inability of countries dependent on foreign energy resources to diversify their import routes sufficiently poses a threat to the economic security of states, and this issue is widely discussed on the world agenda. On the other hand, diversification of existing markets and export routes is also a vital strategy for establishing economic security for countries exporting critical energy resources.
With total natural gas reserves of 13.6 trillion cubic meters, Turkmenistan has the potential to become a key player in the energy sector. With these reserves, Turkmenistan holds 7.2% of the world's natural gas reserves. In 2021, the country broke the record for natural gas production in its history with an annual production of 83.77 billion cubic meters (bcm). Having consolidated its role in the global energy market, Turkmenistan constitutes an essential alternative for the European market, which needs a stable natural gas supply.
Looking at Turkmenistan's natural gas exports, China is the largest buyer. In 2021, China imported 34 bcm of Turkmen natural gas. While this figure corresponds to about 40% of Turkmenistan's annual production, China's sizable share in Turkmen gas exports brings some risks and vulnerabilities to Turkmenistan. The clearest example of this is the March 2020 decision by PetroChina to suspend natural gas purchase contracts with Central Asian countries, led by Turkmenistan, after declaring force majeure. The main reason for the suspension decision was the drop in energy demand caused by the Covid-19 pandemic. On the other hand, this has prompted the Turkmen government to take measures to address potential demand fluctuations in major energy importers such as China.
Considering all these developments, it is not surprising that Turkmenistan is attempting to access the European market through the Southern Gas Corridor, in which Azerbaijan and Turkey play an active role. Although this is not the first time that Turkmenistan's inclusion in the Southern Gas Corridor has been on the agenda, it seems that the parties have taken concrete steps to an unprecedented extent. Following the visit of the Turkish Vice President to Turkmenistan, the public opinion is that a consensus has been reached on the transmission of Turkmen gas to Europe via the Trans Adriatic Pipeline via the Trans Anatolian Natural Gas Pipeline (TANAP) Project.
Although it is not yet clear how Turkmenistan's natural gas will be delivered to Europe within the Southern Gas Corridor, some options are being considered. One of the options is the transmission of Turkmen natural gas to Azerbaijan via Iranian territory. The approach underpinning this idea is “the natural gas swap agreement" currently signed between Turkmenistan, Iran, and Azerbaijan in November 2021, which provides for natural gas transfers between the three countries. Under the agreement, up to 2 bcm of natural gas per year will be transferred from Turkmenistan to Iran. The aim here is to ensure natural gas supply to the northern regions of Iran, especially during the winter. In return, Iran will deliver natural gas to Azerbaijan equivalent to the volume of natural gas delivered from Turkmenistan. On the other hand, it is debated whether there are obstacles to increasing the volume of the mechanism established under this agreement. Among the possible obstacles are the fact that Iran is subject to Western sanctions, as well as Iran's limited natural gas transmission infrastructure to Azerbaijan.
Another option considered for transmitting Turkmen natural gas to Europe is the Trans-Caspian gas pipeline project, which came to the agenda nearly two decades ago and has been much debated. Although intensive diplomatic efforts were made in the following years to realize the Nabucco pipeline project, it could not compete with the South Stream gas pipeline project, and its construction could not be agreed upon. Under the project, Turkmen natural gas is planned to be transported first to Azerbaijan via a pipeline under the Caspian Sea and then to Europe via Turkey's TANAP Natural Gas Pipeline through Georgia using the existing natural gas transmission infrastructure.
The Southern Gas Corridor initiative is designed for long-term interests. The energy transmission line investments under the initiative have been realized by identifying strategic opportunities for the future. For the Nabucco Natural Gas Pipeline Project, which aims to transport Turkmen natural gas from the Caspian Sea to Europe, the initial projected transmission capacity is 10 bcm. Accordingly, a satisfactory result emerges when the investments within the Southern Gas Corridor are evaluated. In case of additional investments, sufficient infrastructure capacity can be provided for the transportation of Turkmen natural gas to Europe.
With the South Caucasus Pipeline (SCP) expansion project (SCPX), which first connects the Shah Deniz natural gas fields to mainland Azerbaijan and then connects with TANAP via Georgia, the capacity of the South Caucasus Pipeline has reached 24 bcm per year as of 2018. This capacity can be increased to 31 bcm with additional investments.
In the case of the Trans Anatolian Natural Gas Pipeline (TANAP) infrastructure, the annual natural gas transportation capacity of 16 bcm can be increased to 31 bcm with the addition of five compressor stations along the pipeline route. The Trans Adriatic Natural Gas Pipeline (TAP), which transits natural gas from Turkey to Europe as part of the Southern Gas Corridor, has an operational capacity of 10 bcm annually. In addition to the modifications of the existing compressor stations, it is possible to reach the capacity of 20 bcm by adding two new compressor stations along the pipeline route.
As a result of these additional investments, the Southern Gas Corridor can reach sufficient capacity to transmit Turkmen natural gas to Europe. Therefore, with its natural gas reserves and energy investments, Turkmenistan has the potential to become an alternative energy supplier for European countries.
The geopolitical turmoil in the energy markets requires serious revisions in countries' energy policies. While it seems inevitable that states and companies will turn towards sustainable energy transmission routes, it is clear that political biases should be avoided in the search for new alternatives. We are going through a period when the main focus of energy policies should be to ensure stability in the transmission of energy resources. In this respect, the necessity of transmitting Turkmen natural gas to Europe through the Southern Gas Corridor is better understood, both because the necessary infrastructure has already been established at some point and because the government of Turkmenistan is seeking new cooperation in the field of energy. There is no doubt that the integration of Turkmenistan into the Southern Gas Corridor initiative will have a positive impact on regional energy security.