A new Florida-based start-up hopes to have found a solution to the decades-old puzzle of transporting natural gas from Turkmenistan’s huge reserves across the Caspian to Azerbaijan and, potentially, to Europe.
Trans Caspian Resources (TCR) was founded in April and is co-managed by a former US Ambassador to Turkmenistan, Alan Mustard. It is managed by Bert Watson, a longtime US energy lobbyist. It has a five-member advisory board, which includes two former senior executives from BP, the largest foreign investor in Azerbaijan, and Rob Sobhani, a frequent commentator in the Azerbaijani media.
TCR’s plan aims to bypass what has always been the biggest obstacle to a Trans-Caspian gas pipeline: Azerbaijan’s resistance to letting Turkmen gas compete with its own energy exports.
The idea is to build a relatively short (42 kilometers) pipeline between the Magtymguly offshore oil field in Turkmenistan, across the middle of the Caspian, to the giant Azerbaijani oil field, Azeri-Chirag-Gunashli (ACG) operated by BP.
The pipeline, which would be capable of transporting between 10 and 12 billion cubic meters of gas per year, would only transit – at least initially – only “associated gas” from the Turkmenistan field, that is to say gas emitted as a result of oil drilling. . This gas is currently “burned” or burnt, a practice that wastes gas and contributes to climate change.
The ACG also contains large amounts of associated gas which, instead of being flared, passes through a network of submarine pipelines to the onshore Sangachal gas processing plant in Azerbaijan and to ‘to consumers.
Azerbaijan’s own gas production has not grown as quickly as expected, and for several years Baku was forced to import from Russia and Iran to meet growing local demand.
Gas flowing directly from Turkmenistan would help fill the local deficit, and any excess could be exported through the region’s existing transit pipelines to Georgia and Turkey, which are currently facing their own gas shortages.
“We believe the time is right, given the need for energy in the South Caucasus region, the need to reduce flaring, the need to replace coal and oil with natural gas in the coming transition. towards renewable energy sources, ”Mustard told Eurasianet.
Although using the existing ACG infrastructure reduces costs and the proposed TCR project is small in scope, it is still far from straightforward.
The company is currently seeking investors to fund feasibility studies to confirm that the plans are both technically and commercially viable, after which the precise cost will become clear, Mustard said.
TCR will also have to convince the various interested parties – Baku and Ashgabat – that the project would be in their long-term interests.
The Turkmen government, suffering from permanent economic problems, is unlikely to object, especially as TCR believes the project could be a first step towards the transit of larger volumes across the Caspian.
“This will serve as a proof of concept that Turkmen gas can be delivered westward, if the government of Turkmenistan is interested in expanding gas exports to new Western markets,” Mustard said.
Baku, however, may take more persuasion, given the potential new competition.
But Mustard said TCR has no plans to market the gas itself and instead will seek to sell it to Azerbaijani state oil company SOCAR, which can then sell the gas to whomever it wants.
Contacted by Eurasianet, a spokesperson for SOCAR (which also owns a 25 percent stake in the ACG field) declined to comment on the project “for the time being.” A spokesperson for BP, the field operator ACG and its largest shareholder with a 30.7% stake, claimed not to be aware of the company and the project, despite the “advisory board” of five. TCR people including two former senior BP executives.
“Azerbaijan has indicated that it wants the pipeline to continue”, TCR writing on its website.
If TCR succeeds in building the pipeline, it would end a saga that has dragged on since the collapse of the Soviet Union in 1991.
Although it has the fourth largest gas reserves on the planet, Turkmenistan’s location in Central Asia has made it anything but impossible to export gas to lucrative European markets, being forced to periodically sell gas at low prices to Russia and Iran, which resell the gas to Europe, Turkey and even Azerbaijan, with a considerable mark-up.
Previous attempts to develop pipelines across the Caspian have failed for a number of reasons, one of the most important of which was the continued failure of the five Caspian coastal states to agree on the division and the use of the seabed.
This issue is now resolved thanks to the 2018 Convention on the Legal Status of the Caspian Sea, which saw the five finally ok on how to divide the sea.
The most advanced of the failed gas pipeline projects proposed in the late 1990s, partnered with Shell – which owned the rights to the gas fields in Turkmenistan at the time – with GE and Bechtel, and envisioned a massive pipeline carrying gas. gas to Azerbaijan, to Turkey, then through Turkey to Europe.
This project failed, however, after the discovery of the huge Shah Deniz gas field in Azerbaijan, after which Baku lost interest in shipping gas for its Caspian neighbor, an about-face that poisoned relations with Ashgabat for two decades.
Relations between the two have improved a lot, as evidenced by the deal earlier this year to jointly develop the once contested Dostluk oil and gas field.
The timing could therefore be right to finally build a pipeline, analysts say.
“Any project that can end the feeling of stasis, if it does not divide and involve both Turkmenistan and Azerbaijan, it could be successful,” Luca Anceschi, energy analyst and professor of Eurasian studies, told Eurasianet at the University of Glasgow.
Meanwhile, the window for ambitious new hydrocarbon projects may close, as European consumers – the target market for a Trans-Caspian pipeline – attempt to switch to energy alternatives.
“Turkmenistan is a perfect example of lost opportunities – being careful won’t help them, and this could be their last chance,” Anceschi said
Currently, at least, there is a strong demand for additional gas that Turkmenistan could satisfy.
“Azerbaijan needs more gas, Turkey needs more gas and with a lot of capacity available in the TANAP and TAP pipelines, there is the European market which also needs more gas”, Arif Akturk , Turkish energy consultant and former head of gas purchases at Turkey. State gas importer and transit pipeline operator Botas, told Eurasianet.
The main losers, Akturk said, would be Russia and Iran, who could potentially lose both an easy source of cheap gas for themselves and also stronger competition for their exports.
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