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Could India become Turkmenistan's next major gas customer?

The future of Turkmenistan's gas industry looks a little more positive in the wake of the announcement by Dharmendra Pradhan - India's oil minister - that the decade-long negotiations for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline are at their final stage. If true, this could point to a major shift in the central Asian energy landscape.

Speaking in the Lok Sabha on March 9th, Mr Pradhan said that the discussion between the four involved countries surrounding the pipeline's construction was almost complete, meaning that the project could soon begin. He added that this would reduce India's dependence on the Middle East.

While the pipeline will definitely be a major positive for India, how much will it benefit Turkmenistan? A new customer for the nation's natural gas could have major effects on Turkmen industry and trade.

 

How large a customer will India become?

Although fairly rich in natural resources, India imports a large amount of oil and gas. It is the fourth-largest energy consumer in the world, and while it was self-sufficient in gas in 2004 it has climbed to being the world's fourth-largest importer of the resource in just ten years. Its growing population and economy give it the potential to be an extremely lucrative market to Turkmenistan.

However, what advantages does Turkmenistan have over the other nations India imports from that will give it a sizeable share of the nation's imports? For one, as Mr Pradhan mentioned, India is looking to become less dependent on Middle Eastern natural gas.

The oil minister was quick to emphasise that his country was not over-reliant on the Middle East, stating that India currently purchases crude oil from over 25 countries. However, 62 per cent of the country's imports come from the Middle East; particularly Saudi Arabia, which supplies one fifth of India's oil.

There is no denying that importing heavily from Turkmenistan would break this dependence, which is something the TAPI project would enable the nation to do. The pipeline would, in theory, have the capacity to provide India with 1 trillion cubic feet of gas per year, which is roughly half the amount the country consumes annually according to the US Energy Information Administration.

 

What kind of boost would this provide Turkmenistan?

There is, of course, no guarantee that India will make use of even a fraction of this capacity, but by the time the pipeline is constructed (if the negotiations are concluded) the nation's demand for gas will probably have grown significantly. Turkmenistan will then be in a good position to supply a large portion of India's gas.

Looking at Turkmenistan's options, this would be an excellent business decision. Currently, central Asian countries are looking largely to the EU as the next big market to break into. Turkmenistan is no different, but this route will feature heavy competition from other gas-producing nations, such as Azerbaijan.
Meanwhile, Russia is becoming less of a reliable customer for Turkmenistan. India, on the other hand, has a clear need for a gas supplier not from the Middle East, which is a niche Turkmenistan is more than capable of filling.


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