Turkmenistan: Pipe Dreams Turning Real

Hess To Form MLP For North Dakota Oil, Gas Transport Assets
Being a landlocked country, Turkmenistan has focused on exporting gas to willing customers through ambitious pipeline networks – with many more in the offing.

The meteoric rise of Turkmenistan into the top echelons of the coveted list of global energy suppliers has been nothing short of a spectacular phenomenon. Within a couple of decades, the fortunes of the sleepy nation have been resurrected, owing to a mix of serendipity and ever-growing global gas requirements. Lying on the famous Silk Road, the Central Asian nation has managed to grab headlines owing to the revised estimates wherein it ranks only behind Iran, Russia and Qatar in terms of gas reserves. Now it is considered a key source in satiating the thirst for energy across booming economies of Asia and the world.

Being a landlocked country, Turkmenistan has focused on exporting gas to willing customers through ambitious pipeline networks – with many more in the offing. In the process, it has emerged as an important player in the global gas geopolitics as well. Turkmenistan initially began supplying gas to the other parts of the former Soviet Union during the 1960s, when the first phase of the Central Asia-Center gas transmission system was brought into operation. Russia has been the chief beneficiary even after the breakup of the Soviet Union because it resupplies Turkmen gas to Europe, thus enriching itself economically and also placing itself on a firm footing politically. Turkmenistan has also been supplying gas to Iran since 2010 through the Daulatebad-Sarakhs-Khangiran pipeline. Gas also flows to Iran through the 200-kilometer-long Korpeje-Kordkuy pipeline, helping to meet the fuel requirements of industries in Iran's northern tier. The two pipelines have a combined capacity of 20 billion cubic meters (BCM) per year.

Recent geopolitical dynamics have strengthened Turkmenistan's hand in the global gas trade. Asghabat's importance in the global gas dynamics has increased exponentially in the aftermath of Russia's decision to cut back gas supplies through Ukraine. With Europe being highly dependent on gas supplies from Russia, Turkmenistan remains the most viable supplier to fulfil the ever-growing requirements of the gas-starved continent.

Turkey's recent signing of the framework agreement to supply gas to the proposed Trans-Anatolian Natural Gas Pipeline Project (TANAP) marks an important step toward the goal of shipping Turkmen gas to Europe. The $20 billion project is scheduled to be completed by the end of 2018 and gas delivery is expected to start by 2019. The pipeline is expected to transport approximately 16 BCM of gas from Azerbaijan's Shah Deniz II field in the Caspian Sea, currently being developed by a BP-led consortium. The capacity can further be increased up to 31 BCM by 2026.

Turkmenistan has also started working on the East-West pipeline project to further enhance its network. The East-West pipeline would have the capacity to carry up to 30 BCM annually. The 800-km line would bring gas from southeast part of the country to the coast of the Caspian Sea, thus readying the country to feed the proposed Trans-Caspian Gas Pipeline.


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