Geopolitics of Trans–Caspian Gas Pipeline
Dr Pravesh Kumar Gupta, Research Associate , VIF
Introduction

Trans-Caspian Gas Pipeline (TCGP) is designed to export natural gas from resource-rich Turkmenistan and to a certain amount from Kazakhstan to Azerbaijan by putting an underwater pipeline in the Caspian seabed. From Baku, Azerbaijan through Georgia, Turkmen gas export will get linked with the Trans-Anatolian Natural Gas Pipeline (TANAP) in Turkey which ultimately reaches Europe. This pipeline is proposed in a way that it circumvents two littoral states of the Caspian Sea; Russia and Iran which has become bone of contention in realizing this project.

TCGP project remains significant for fulfilling energy requirements of remotest parts of western countries. The Caspian region is estimated to hold almost 300 trillion cubic feet of natural gas which makes it the greatest natural gas reserve in the world and also that could be exploited with improving technology and increasing cooperation among the littoral states.1 The proposal to build a trans-Caspian pipeline emerged in the late 1990s and early 2000s. But the uncertain legal status of the Caspian Sea and contested delimitation of rights to the seabed, with its rich oil and gas resources, had been flagged by both Iran and Russia to delay the project.

Europe is heavily dependent on Russia for its energy imports. It is not easy to circumvent Russia to export Turkmen gas to the West. However, the only possible way is through positioning a gas pipeline between Turkmenistan and Azerbaijan across the Caspian Sea. To reduce this dependence on Russian energy imports, United States of America and West have been trying to push the Trans Caspian Gas Pipeline (TCGP or TCP).


Source: https://ec.europa.eu/eurostat/statistics-explained/images/a/af/Extra-EU_imports_of_natural_gas_from_main_trading_partners%2C_2017_and_2018.png

Geopolitical Factors

Turkmenistan holds the third position in natural gas reserves in the world after Russia and Iran. Since the collapse of the Soviet Union in 1991, Turkmenistan has tried to construct different pipelines to export its gas both internally and externally. Russia was the biggest gas importer of Turkmenistan until 2010 when China took over. Gas imports from Turkmenistan on a relatively lower rate had facilitated Russia to export its gas to Europe at very profitable prices. However, the Russia’s monopoly over energy exports to Europe may be hampered by the Trans-Caspian Gas Pipeline. Therefore, Both Iran and Russia have serious objections to this project for almost two decades. 2

Russia and Iran have claimed that the TCGP will harm the ecology of the Caspian Sea. The construction of TCGP is supported by both United States (US) and European Union (EU) which is primarily based on two different intentions. US wants to end Russia’s monopoly over energy exports to Europe, cause negative economic impact on Russia and to gain some geopolitical leverage, on the other hand EU intends to diversify its energy imports.3

Prominent support for TCGP came from the US at the end of March 2019, when President Donald Trump sent a ‘Nowruz’ (New Year) message to Turkmenistan's President Gurbanguly Berdimuhamedov. Trump articulated his optimism about Turkmenistan’s capability to take advantage of the new possibilities of gas export to the West in connection with the recently defined legal status of the Caspian Sea. The reference here is to the ‘Caspian Convention’ signed in August 2018, which affirmed the right of Turkmenistan and Azerbaijan to lay a pipeline on the seabed across their contiguous offshore sectors, without veto rights for any other littoral state.4

Through the Caspian Sea convention, five littoral states have agreed to 15 miles of sovereign waters, as well as a further 10 nautical miles of fishing area. Beyond this, there would be common waters. According to Article 5 of this Convention, “the determination of the Caspian Sea and seabed into parts shall be by agreement between states with adjacent and opposite coasts. And it will be based on generally recognized principles and rules of international law in order to enable respective states to exercise their sovereign rights.” 5 Article 14(3) of the Convention states that a pipeline route requires agreement only between countries through which the pipeline crosses.6 All the littoral states except Iran has ratified this agreement.

Currently, China is the biggest importer of the Turkmen Gas. It has also been the biggest importer of Central Asian Gas and oil since late 1990s. Since 2013, with the launch of Belt and Road Initiative (BRI) in Kazakhstan, China has once again inserted its geopolitical ambitions with a twist. Russia and China seem to have arrived at some kind of modus vivendii about their positions in Central Asia with regard to economic and security imperatives. Central Asian Republics, in order to balance both Russia and China have cooperated with Europe for their political, economic and security prerequisites. Moreover, EU has emphasized on energy imports in its renewed Central Asian Strategy. Therefore, the geopolitical game in Central Asia is being played for a long time but now Central Asian countries have learned to play along. TCGP is an example of how Turkmenistan being the largest exporter of natural gas to China is keen to materialize this project so that it can overcome the Chinese monopoly.

In August 2019, Turkmenistan hosted first Annual Caspian Sea Forum in the port city of Awaza in which leaders of five littoral states of Caspian Sea, Russia, Iran, Azerbaijan and Kazakhstan participated. During his speech, EU’s special representative for Central Asia, Peter Burian reiterated that the EU has resumed negotiations with Turkmenistan on having a stake in the financing of TCGP project. Also, representatives of a Euro-Chinese consortium met with Turkmen authorities to discuss the construction and finances of the Project. 7

China and EU expressing their willingness to become financier of this project definitely brought out some implications. However, both potential sponsors have different set of interests with regards to the successful completion of this project. China, in order to add more substance to its ambitious BRI would definitely not be left out of this connectivity project. And it also can get access to Turkey if it becomes a part of TCGP. On the other hand EU has two primary interests with regard to TCGP; firstly, to reduce its dependence on Russian energy imports and secondly, it wants to enhance its geopolitical presence in Caspian region by being directly involved in this project.

Two main stakeholder of TCGP, Turkmenistan and Azerbaijan have been building some crucial infrastructure (domestic pipelines) to take advantage of its energy resources based in Caspian Sea. Azerbaijan has been exporting gas to Turkey through Trans Anatolian pipeline and is also developing another pipeline to deliver gas to Italy. Turkmenistan is exploring options for negotiating with Chinese and European companies for the financing of TCGP. Turkmenistan giving push to TCGP is based on two important factors, first, it wants to diverse its energy export markets which is currently limited to China and Russia. Secondly, Turkmenistan’s cooperation with Azerbaijan on this project would be helpful in mending their bilateral relations and bringing stability in the Caspian region.

After the completion of its East-West pipeline in December 2015, Turkmenistan has potential to deliver 30 bcm per year of natural gas from its Galkynysh field to the Caspian coast. However, for the realization of this scenario, successful completion of Trans-Caspian pipeline is a must. Turkmenistan’s involvement in the Trans-Caspian pipeline will guarantee a greater volume of revenues from gas export to Europe than to exports to China. Beijing has provided huge loans to develop energy sector of Turkmenistan for which in return it imported natural gas at low prices depriving Turkmen administration of realising high revenues. Therefore, Ashgabat is now attempting to reduce its dependency on Chinese exports.

Turkey has offered Turkmenistan to link TCGP with the Trans Anatolian Pipeline, operational between Azerbaijan and Turkey to export its gas to Europe. Therefore, it would also add to Turkmenistan’s options of connecting with European market by reducing its dependency on Russia. However, Russia and Iran being adversely impacted by TCGP may find ways and means to stymie the Project.

Role of Russia and Iran

Russia has geopolitical and economic interests at stake, therefore, it has been consistently opposed to the construction of TCGP. Russia is responsible for almost 40 per cent of energy exports to EU. Turkmenistan’s position as a reliable gas supplier would challenge Russia’s position as the largest energy exporter to Europe. However, irrespective of its economic interests challenged by the building of TCGP, Russia wants to protect its position as a security facilitator in Central Asia. In recent past, Russia’s policy shift to consolidate its security position in the Caspian region can also be ascribed to the growing insecurity at the Afghan-Turkmen border. Since 2014, several radical groups have reemerged in Afghanistan posing a direct threat to the Central Asian countries which share direct border. In October 2017, Russia and Turkmenistan signed a strategic partnership agreement to increase and expand cooperation in the fight against terrorism. This reflects the importance of the security dimension between the two countries.8

Iran’s opposition to the project spins around increasing role of Republic of Azerbaijan in the Caspian Sea as the ally of the US, West and Israel. Iran also considers Azerbaijan as the main challenger of its position in the legal regime of the Caspian Sea. Azerbaijan has been supporting the construction of Trans-Caspian Gas Pipeline because it perceives opportunities to get the transit rights along with playing a more vital role in the energy supply to the EU. Moreover, one of the important importers of Iranian gas is Turkey. And if the TCGP becomes a reality then Turkey may get the Turkmen gas at comparatively cheaper rates. This would drastically affect the Iran’s energy market. Iran along with Russia have been trying to keep the US and West out of the civil and military activities in whole of the Caspian Sea region. TCGP is likely to bring large European investments in the Caspian Region which may also strengthen security related engagements between Turkmenistan, Azerbaijan and West challenging Iran and Russian positions.9

Limitations

There are certain limitation to this ambitious projects. Russia after being bypassed by the West and Turkmenistan may take some stern action in order to halt the progress of TCGP. Kazakhstan being a trusted ally of Russia and a significant littoral state might support Russia but with some resrvations. EU has good trade and economic relations with Kazakhstan, therefore, before choosing its side in issues arising from Caspian region, Kazakhstan would also keep this in mind. Recent rapprochement between Russia and turkey can also play a crucial role in determining the course of development of this project. United States is also likely to derive some geopolitical benefits after the completion of this project. Possibly, for this reason American President Donald Trump has been supporting this project.10

Conclusion

Trans Caspian Gas Pipeline has received impetus in recent past. It has not only been in public discourses but with the signing of Legal Convention of Caspian Sea, a durable geopolitical implication is being attached with it. It will be interesting to note the responses of Russia and Iran as the Project progresses. Changing geo-strategic environment in Central Asian region will have an implication on this project as well. Turkmenistan’s deteriorating economy and its dependence on Chinese imports will further motivate the development of TCGP. Turkmenistan and Azerbaijan’s commitments to build this pipeline disregarding Russia and Iran’s opposition would reflect a new geopolitical power play in Caspian region.

References
  1. Luke Coffey (2019), “A Trans-Caspian Gas Pipeline: Start Small but Aim Big”, COMMENTARY Global Politics, Heritage Foundation, 20May 2019. https://www.heritage.org/global-politics/commentary/trans-caspian-gas-pipeline-start-small-aim-big
  2. Jumayev I. (2012), ‘Foreign Trade of Turkmenistan: Trends, Problems and Prospects’ Institute Of Public Policy and Administration, Working Paper No.11, 2012. https://www.ucentralasia.org/Content/Downloads/UCA-IPPA-WP11-Turkmenistan-Eng.pdf
  3. Bahman Aghai Diba (2018), “Iran and the Trans-Caspian Gas Pipeline”, Payvand Iran News, 18 January 2008. http://www.payvand.com/news/18/jan/1030.html
  4. Culter, R. (2019), “Third time lucky for Trans-Caspian Gas Pipeline? ”, Petroleum Economist 6 June 2019. https://www.petroleum-economist.com/articles/politics-economics/europeeurasia/2019/third-time-lucky-for-trans-caspian-gas-pipeline
  5. Kaleshar, O. S. (2019), “Challenges and Opportunities toward Iran in the Convention on the legal status of the Caspian Sea”, United World, 19 September 2019. https://uwidata.com/5358-challenges-and-opportunities-toward-iran-in-the-convention-on-the-legal-status-of-the-caspian-sea/
  6. “Convention on the Legal Status of the Caspian Sea”, August 12 2018. http://en.kremlin.ru/supplement/5328
  7. ‘Caspian Economic Forum Concludes with Mixed Results & Work to Do’, Silk Road briefing, 13 August 2019. https://www.silkroadbriefing.com/news/2019/08/13/caspian-economic-forum-concludes-mixed-results-work/
  8. Kabouche L (2018), “The Energy Briefing: Despite Caspian Sea agreement, obstacles to Trans-Caspian pipeline remain”, Global Risk Insights, 2 September 2018. https://globalriskinsights.com/2018/09/despite-caspian-sea-agreement-obstacles-trans-caspian-pipeline-remain/
  9. Bahman Aghai Diba (2018), “Iran and the Trans-Caspian Gas Pipeline”, Payvand Iran News, 18 January 2008. http://www.payvand.com/news/18/jan/1030.html
  10. Rahimov, R. (2019), “Prospects for the Trans-Caspian Gas Pipeline Under the Trump Administration”, the Russia File, July 18 2019. Wilson Centre, Washington D. C. https://www.wilsoncenter.org/blog-post/prospects-for-the-trans-caspian-gas-pipeline-under-the-trump-administration

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>

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