The Turkmen Gas Hustle

In 2016, Russia’s Gazprom stopped buying gas from Turkmenistan’s Turkmengaz following a pricing dispute. The previous year, Gazprom had filed a case against the Turkmen state gas company in a Stockholm arbitration court demanding a revision of prices; Turkmengaz, for its part, reported that Gazprom hadn’t paid for any gas in months.

Three years later, in April 2019 Russia started buying Turkmen gas again under a short-term contract. A five-year deal was settled that summer.

But when it came time to renegotiate in June 2024, the two sides once again disagreed over the price. Negotiations in the ensuing months were not fruitful.

In October 2024, Turkmen Minister of State and Chairman of Turkmengaz Maksat Babayev commented on the termination of the contract. “Today the demand for our gas from the north, west, and east is increasing.” he said. “Therefore, we can say that we are at the stage of negotiations with different buyers and countries every day.”

Russia’s Decline and China’s Rise as Customers

Although Russia has the world’s largest gas reserves and in 2022 ranked second in the world in terms of natural gas exports (behind the United States), Moscow had long imported Turkmen gas either for domestic use or resale to Europe. But over the years, Russia’s imports from Turkmenistan dwindled and pricing disputes disrupted energy ties between the two states.

In 2008, Gazprom purchased more than 40 billion cubic meters of gas from Turkmenistan. By 2014 imports had fallen to around 11 bcm and in December 2014, Gazprom notified Turkmenistan that it would limit its purchase in 2015 to 4 bcm.

This decline in exports to Russia was paired with increased exports to China. In 2009, the first line (Line A) of the Central Asia-China Gas Pipeline was completed; two more lines (B and C) were added in 2010 and 2014, respectively. According to the 2011 Statistical Review of World Energy, China imported just 3.55 bcm of gas via pipelines from Turkmenistan in 2010. By 2015, that figure had risen to 27.7 bcm. Chinese imports of Turkmen gas rose as high as 32.9 in 2022 – falling slightly to 30.5 bcm in 2023 – but due to constraints of the existing pipeline infrastructure, there isn’t much capacity to increase those exports significantly. The three operating lines of the Central Asia-China Gas Pipeline have a rated capacity of 55 bcm per year. Both Kazakhstan and Uzbekistan export via the same pipelines as Turkmenistan, meaning there isn’t much room for Ashgabat to push more gas east at this juncture.

In late 2023, a source told S&P Global that PetroChina aimed to resume construction of the long-awaited Line D of the Central Asia-China Gas Pipeline “immediately if the upstream gas supply contract with Turkmenistan is finalized.”

Line D is envisioned to run from Turkmenistan through southern Uzbekistan, Tajikistan, and Kyrgyzstan and into China’s Xinjiang and will reportedly have a capacity of around 30 bcm per year. Ground had been broken on the project in Tajikistan in September 2014. But in a February 2024 press conference, Tajik Energy Minister Daler Juma said that price disputes among the countries involved continued to delay the project.

As of late December 2024, there had been no news about that new supply contract between Turkmenistan and China – and no news about Line D’s ensuing resurrection.

The South Asia Pipedream

While Line D has lingered on the edge of reality for a decade, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline has been a literal pipedream since the 1990s. The $10 billion 1,800-kilometer pipeline is envisioned to eventually carry some 33 bcm of gas per year to South Asia from Turkmenistan.

In December 2015, Turkmenistan hosted a ceremonial groundbreaking on the project. Then-Afghan President Ashraf Ghani attended. A few years later, in February 2018, Ghani tweeted that he was in Herat to meet with delegations from Turkmenistan, Pakistan, and India to “inaugurate the arrival of TAPI pipeline.” Although the Taliban were the prime culprits behind the insecurity that had long dogged TAPI, the group pledged at the time to protect the pipeline. I wrote then that “The Taliban probably see the benefit of a completed TAPI, in the form of dollar signs and an imagined future in which the Taliban are back in Kabul.”

Well, the Taliban are back in Kabul. A Turkmen government delegation led by Minister of Foreign Affairs Rashid Meredov went to Kabul in November 2021, mere months after the collapse of the Republic government, with TAPI at the top of its agenda.

Back in 2019, Turkmenistan claimed to have completed construction on its 214-km section of the pipeline.

Five years on, in April 2024, Muhammetmyrat Amanov, the general director of TAPI Pipeline Co., the project’s operator, was still optimistically touting the completion of the Turkmen portion at an investor forum in Ashgabat. According to Interfax, in regard to Afghanistan “he said, important agreements have been reached on security issues and the acquisition of land for laying gas pipeline pipes on Afghan territory.”

In September 2024, former president and current Chairman of the People's Council of Turkmenistan Gurbanguly Berdimuhamedov was joined by his son, President Serdar Berdimuhamedov, and acting Afghan Prime Minister Muhammad Hassan Akhund for yet another ceremony on the Afghan-Turkmen border, this time marking the start of construction on the 150 km Serhetabat-Herat section of the pipeline.

Nearly a decade after breaking ground on the Afghanistan portion of TAPI, and the project is still at the Afghan-Turkmen border and the prospect of exporting gas to South Asia remains a distant dream.

A European Future or a Fantasy?

Europe’s desire to wean itself from Russian gas in light of the war in Ukraine has renewed interest in yet another long-discussed, long-delayed pipeline project: the Trans-Caspian Gas Pipeline. The pipeline would stretch across the Caspian Sea, linking Turkmenistan to Azerbaijan. Despite decades of discussion, geopolitical deadlock has forstalled the project from materializing. Russia and Iran have long opposed the pipeline, since it would cut them out of the business, while Europe is especially interested for that same reason.

Regardless of that interest, however, the existing pipeline infrastructure that the Trans-Caspian pipeline would ultimately link up with – the Southern Gas Corridor, which connects Azerbaijan to Italy – is expected to hit full capacity by 2027 – and that’s without Turkmen gas.

Nevertheless, in August 2023, the Turkmen Foreign Ministry issued a statement of support for the project, calling it “absolutely realistic” and “justified from an economic point of view.” The statement claimed the Trans-Caspian pipeline would be “capable of making a tangible contribution to ensuring energy security in Eurasia.” The statement marked a significant change in tone, with Ashgabat publicly agreeing for the first time that the 2018 Convention on the Legal Status of the Caspian Sea “provides an adequate legal basis for such a project.”

Turkmenistan followed that announcement with a visit by President Serdar Berdimuhamedov to Hungary, where Ashgabat and Budapest “concluded a political agreement,” to quote Interfax, regarding gas supplies, illustrating continued European interest – albeit without the direct infrastructure to enact it.

Swaps in the Middle Distance

In March 2024, Turkmenistan and Turkiye were flirting over a swap deal in which Ashgabat would export gas to Iran and Iran in turn would export gas to Turkiye. “Turkmen gas” would thus reach Europe in a roundabout fashion.

The deal appeared to collapse as of September 2024, with rumors swirling that Turkmenistan was persnickety over pricing. Turkiye opted for a new LNG deal with France’s TotalEnergies to export LNG from the United States to Turkiye.

Turkmenistan has other swaps in the works.

Ashgabat already exports 1-1.5 bcm of gas to Azerbaijan via a swap arrangement involving Iran and in November 2024 announced a deal to export 10 bcm to Iraq, also via a swap with Iran. Iranian and Turkmen officials have stated big goals of Ashgabat shipping as much as 40 bcm of gas to Iran.

But it’s not really a done deal: To export 10 bcm of gas to Iran will require the repair of existing pipeline infrastructure.

As Bruce Pannier reported recently,

Iranian and Turkmen officials met in early July 2024 to sign a contract for the transfer of gas. That agreement called for “Iranian companies [constructing] a new 125-kilometer gas pipeline along with three gas pressure booster stations in Turkmenistan aimed at boosting annual shipments of gas to Iran to 40 bcm.”

Pannier also noted that although 10 bcm of that gas is allotted for Iraq, it’s not clear if there’s a customer for the other 30 bcm.

Nevertheless, if Ashgabat can get the swap up and running, Iraq would become its second-largest gas customer, distantly trailing China.

Sell Local?

With Russia once again ending its purchase of Turkmen gas, China constrained from increasing its imports by pipeline limitations, TAPI mired – as always – in Afghanistan, and Europe more of an idea than a plan, it may seem that Ashgabat is out of major partners.

But perhaps the solution is closer to home.

The vast majority of Turkmenistan’s gas exports go to China (around 30 bcm). In recent years Uzbekistan has imported around 2 bcm annually, and Tashkent and Ashgabat are bullish on that figure rising. On December 5, Uzbek President Shavkat Mirziyoyev spoke with the elder Berdimuhamedov via phone, with Turkmen state news stating that Berdimuhamedov “agreed to increase the volume of Turkmen natural gas supplies to Uzbekistan.”

While Uzbekistan has decent gas reserves of its own – producing 51.7 bcm of gas in 2022 – the region’s most populous state has struggled in recent years to manage skyrocketing domestic energy demands. In 2023, Uzbekistan signed a two-year deal to import 2.8 bcm of gas from Russia annually.

The stars are aligned for a deal that’s good for both sides: Uzbekistan needs gas and Turkmenistan needs customers. The partnership is also attractive in light of efforts in Central Asia, many of them spearheaded by Mirziyoyev himself, to deepen regional cooperation sans external powers like Russia or China. While amounts have not been mentioned, it seems likely that the 5.5 bcm that Russia used to buy from Turkmenistan may soon head to Uzbekistan instead.