Caspian Diversion
The idea of building a Trans-Caspian pipeline was once again raised by EU Energy Commissioner Andris Piebalgs during a meeting with Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov in Astana on May 4. The remark has received special attention after the recent critical comments made by U.S. Vice-President Richard Cheney addressed at Russia’s allegedly manipulative use of its own stranglehold on supplies to Europe. As Pielbags commented:
“We support the construction of a fourth corridor for transporting gas to Europe … We will support construction of a Trans-Caspian pipeline because it would give us additional volumes of gas and provide Kazakhstan with another means of export diversification.”
The proposed project could be of obvious interest to Turkmenistan, which has had its own designs on creating Trans-Caspian pipelines in the past. As an article in Vremya Novostei notes, the plan for bringing Turkmen gas to European markets, proposed in the early 1990s, was estimated to cost $2.5 billion. Initially, it planned to import up to 16 billion cubic metres of gas per year from Turkmenistan through Azerbaijan and Georgia, with a prospect to boost gas supplies to 50 billion cubic metres. However, the project never materialized because of disagreements between Turkmenistan and Azerbaijan over gas quotas in the pipeline.
When Washington’s interest in the region flared up again in 1999, Ashgabat received $750,000 for research. General Electric, Bechtel, and Royal Dutch/Shell even formed a consortium for the project. However, Ashgabat and Baku never settled the matter of national shares in the project, and that was the end of the project.
Nothing has been mentioned so far about the potential use of this pipeline in transporting Turkmen gas to Europe, but interest in arranging the purchase of Turkmen energy resources from the European Union has been a feature of bilateral relations for quite some time.
on May 10th, 2006 at 3:23 am
Apparently the project’s prospects have very weak correlation, much less causality relations, with the Europeans or Americans’ political declarations.
Even should these parties subsribe a relatively moderate cost of $2.5bn, the project is still going to face prospects of political instability in South Caucasus and Kurdish-populated areas of Eastern Turkey. Even should the political risk be totally eliminated, the gas will still need to be brought from Turkey through Balkans to more developed and mature markets of Central and Western Europe - all at additional cost. Even if these transit countries suddenly offer a market potential sufficient to sustain return on initial investment, more will be required to build additional infrastructure (regional and local gas grids, underground storage facilities, etc.). As far as I can see, the project is a no-go.
Which is not necessarily bad for us, Turkmens. All the more reason to start developing naitonal chemical industry, processing natural gas, oil and their various fractions into value-added goods with low long-haul transportation costs, or more power plants to sell electricity to neighbors. The Europeans will have to sort out their energy problems themselves, not at the account of locking in our economic prospects for another 20-30 years.
on May 10th, 2006 at 8:45 am
I have also viewed the viability of this project somewhat sceptically, but for the sake of argument, the entry of Bulgaria and Romania to the EU puts Turkmenistan three countries away from EU markets (not considering Greece, which is physically isolated by the FY, Albania and the sea). I am no expert, so I don’t know how EU candidates fit into European designs on future energy plans.
At any rate, the Trans-Caspian route mentioned in this story has been raised again to use as a bogeyman to scare the Russians. The strongest evidence that little practical progress will be made imminently on this proposal is in the history of wavering interest rather than the potential future.