Trans-Caspian Pipeline (proposed)

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Overview

The proposed Trans-Caspian Pipeline (TCP) is a proposed 300-kilometre undersea pipeline project running between Azerbaijan and Turkmenistan.[1] with the objective of tapping the vast, recently discovered Turkmenistani gas reserves.[2] The pipeline would draw gas from Turkmen and Azerbaijani fields and would required signatures from both countries.[3]

History

The first incarnation of the project, 1,640km in length at a cost of $2-3 billion, was actively lobbied for in the 1990s. It was designed to carry up to 30 billion cubic metres (bcm) of gas per annum, 16bcm for the Turkish market and 14bcm for European consumers. However a series of complications, in particular the conflict between Turkmenistan and Azerbaijan over gas share and division of Caspian fields, meant that the project was stalled and eventually abandoned. However interest in the project was renewed in connection with the EU-backed Nabucco project in 2002, which could connect with the TCP to carry natural gas through Turkey to European consumers. The pipeline would draw gas from Turkmen and Azerbaijani fields and would required signatures from both countries.[4]

Negotiations between the EU, Azerbaijan and Turkmenistan began in September 2011 in order to define the legal framework and terms of operation of the pipeline, and European Commissioner for Energy Gunther Oettinger said he aimed to strike a deal 'as soon as possible' as a means to add 40 billion cubic meters of gas annually to the new southern gas corridor transit route from the Caspian Sea to Europe.[5] However according to March 2012 reports by the Atlantic Sentinel the third round of negotiations on the trans-Caspian route stalled due to both Russia and Europe being unwilling to relinquish the demands of the other, leading to talk of a greater rift between the two on energy security.[6]

Azerbaijani officials have commented that, especially in the face of opposition from other regional players, the progress of a cross-Caspian route is a matter of political will, particularly in Kazakhstan.[7] However in January 2013, Energy Minister Natig Aliyev said that the two documents to be signed, between the Azerbaijani and Turkmen presidents and the head of the European Commission, was coming to a close.[8]

Source of Supplies

Turkmenistan has proposed supplying 40 billion cubic meters of gas per year, with 10 billion coming from offshore wells and another 30 billion through a new, 620-mile, east-west pipeline connecting the country's eastern Galkynysh field to the Caspian coast. This amount would more than fill the capacity of the proposed EU-backed Nabucco pipeline.[5]

In 2009 up to 2 million tons of Kazakhstan's North Caspian oil was predicted to flow across the Caspian by tanker and link to the Baku-Tbilisi-Ceyhan (BTC) pipeline and President Aliyev commented that cross-Caspian flows of oil are inevitable given Kazakhstan's production schedule. However in the long term, a cross-Caspian pipeline would be preferable and more economical to an enhanced tanker fleet to the Azerbaijanis. As of 2009 Azerbaijan had an existing fleet of 6-7 small tankers, carrying up to 13,000 metric tons and these tankers, if managed properly, could transport up to 20 million tons per year.[9]

Transport of Gas Eastwards

A leaked diplomatic cable from 2009 suggested that, reacting to the launch of the TransAsia pipeline from Turkmen might be considering the potential of exporting future gas east to China rather than West, North or South as previously discussed. SOCAR has publicly stated that Azerbaijan must consider all routes to diversify its export routes. However US officials commented that any hints towards such a move are more likely to be intended to place pressure on Turkey in order to advance difficult gas negotiations, than a genuine effort to export eastwards.[10]

Opposition to Project

The Russian reaction to the proposed pipeline project has been negative, leading some commentators to suggest that Russia may initiate a conflict over the issue.[2] Russia, which is developing its rival South Stream pipeline project in the same region, contends the deal would upset the legal and geopolitical balance in the Caspian basin.[5], claiming that infrastructure cannot be built until the Caspian Sea has an internationally accepted status as the maritime boundaries are currently contested between the sea's five littoral states. This dispute could de-rail plans for the subsea pipeline.[2]

In response to this, President Aliyev has asserted that Azerbaijan does not have to ask Russia for permission to work with Turkmenistan or Kazakhstan in the Caspian Sea, noting that Russia, after all, had not asked littoral states for permission to construct pipelines in the Baltic Sea or Black Sea.[9]

In 2012 Eurasianet reported that a new gas deal between China and Turkmenistan could delay the development of the TCP. The report suggested that this move of not fully committing to the TCP may be a move on the part of Turkmen president to avoid political tension in the Caspian region. On the part of the Chinese, a Chinese diplomat was quoted as saying that Beejing will do its best to make sure the pipeline is not developed because 'China does not want Turkmenistan to use European prices to bargain for an increase in prices to China.'[11]

Iran also opposes the construction of the pipeline.[5]

References

  1. Trans-Caspian pipeline pact to energize EU gas project”, Asia Times, 23 March 2012.
  2. 2.0 2.1 2.2 Azerbaijan-Turkey gas deal key to Caspian supply”, Petroleum Economist, 23 September 2011.
  3. Azerbaijan & Turkmenistan: Renewing Caspian Sea Energy Dispute”, Eurasianet, 11 July 2012.
  4. Kazakhstan’s Gas: Export Markets and Export Routes”, Oxford Institute for Energy Studies, November 2008.
  5. 5.0 5.1 5.2 5.3 Trans-Caspian pipeline talks progressing”, UPI, 16 March 2012.
  6. Kazakhstan’s Gas: Export Markets and Export Routes”, Atlantic Sentinel, 16 May 2012.
  7. Azerbaijan: Se Morningstar, President Aliyev Discuss Turkmenistan, Kazakhstan”, Wikileaks, 2 September 2009.
  8. Drafting of papers on Trans-Caspian gas pipeline close to completion: Azerbaijani official”, Azernews, 6 February 2013.
  9. 9.0 9.1 Azerbaijan: Se Morningstar, President Aliyev Discuss Turkmenistan, Kazakhstan”, Wikileaks, 2 September 2009.
  10. Azerbaijan: The View From Baku On The Turkmen-china Pipeline”, Wikileaks, 30 December 2009.
  11. Turkmenistan: Chinese Deal Helps Stall Trans-Caspian Pipeline, Deter Caspian Conflict”, Eurasianet, 30 November 2011.