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Where is Turkmenistan's gas going?

One of the latest developments in the oil and gas industry has been the announcement from Iran that it is looking to transfer natural gas from Turkmenistan to Turkey. This news has come from the National Iranian Gas Company (NIGC), which expressed its intent to move the gas rather than relying on the current plans of using an underwater pipeline in the Caspian Sea.

Azizollah Ramezani, the NIGC's international affairs director, said: "We propose that gas be transferred from Azerbaijan and Turkmenistan to Iran and then be exported from there to Europe through Turkey. This is the most economical and cost-effective way of transferring gas to Europe."

However, is this the best option for all involved? Iran and the NIGC certainly seem to think so. However, there is no word at the moment from Turkey, Turkmenistan or Azerbaijan, the three other countries that would be involved in this project. How would it affect them, and how will they react to it?

 

Turkey

First of all, Turkey, the supposed recipient of Turkmenistan and Azerbaijan's gas. It is well-known that the country wants to position itself as an energy hub, something it is well on the way to doing. Turkey is in an excellent location for this kind of trade, and is the location of the 'Southern Gas Corridor' network of pipelines that includes the South Caucasian Pipeline (SCP), and will featurethe Trans-Anatolian Natural Gas Pipeline (TANAP) and Trans-Adriatic Pipeline (TAP) once they have been constructed.

However, in the past the nation has been criticised for being relatively reliant on Russian gas imports. A link to Turkmenistan and Azerbaijan would be extremely beneficial for Turkey, but the proposed Caspian Sea pipeline would achieve this. Turkey has had no real criticisms of the plan so far, so it would seem it has no need for Iran to transfer the gas.

 

Turkmenistan

The nation that will presumably be affected the most is Turkmenistan. If Iran is right, the current Caspian Sea pipeline will not be economically feasible, forcing the nation to look elsewhere for options.

The European market could be an incredibly lucrative one for the country. It already exports plenty of gas to China, Iran and - to a lesser extent - Russia, but there is high demand in Europe for non-Russian gas suppliers as nations look to break their dependency on a single state.

However, the fact that Iran is such a large customer of Turkmenistan might have something to do with the offer to transfer its gas. This wouldn't be the first time Iran has been a little tricky with Turkmenistan: in August last year, the Iranian oil minister Bijan Namdar Zanganeh said his country no longer needed to import Turkmen gas and was found to be bluffing.

 

Iran

Of course, the country that would benefit most from the plan would be Iran. The nation has already had plenty to say about the proposed Caspian Sea pipeline, saying that it would be expensive, impractical and bad for the environment. However, there is no indication that transferring gas through Iran would be any more cost-effective.

Currently, the country does not have the infrastructure to properly transfer the gas. It is also in the middle of a major attempt to take advantage of its own reserves and increase its gas production to the point where it no longer needs Turkmenistan's.

At face value, therefore, it seems as if this is not a project that will see fruition. Turkmenistan has remained committed to the Caspian Sea pipeline despite protests from Iran and Russia, and does not have any reason not to be. Turkey too will benefit from the underwater pipeline, with the gas being transferred through Azerbaijan.


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