Caspian Convention Opens up Possibility of Turkmen Pipe to West
After 22 years of negotiations, Russia, Iran, Turkmenistan, Azerbaijan and Kazakhstan signed August 12 a convention giving the Caspian Sea a ‘special legal status’.
It means the Trans Caspian pipeline, a plan dating back to the mid-1990s to build a subsea pipeline connecting Turkmen gas to Azerbaijan and thence to Western Europe’s markets, can no longer be vetoed by Russia and Iran. But strict environmental standards would still need to be met.
Until now, the five Caspian littoral states treated the sea as an inland lake, which meant each country could veto major projects by the others.
The new convention’s Article 14 however now allows Turkmenistan and Azerbaijan to use their undisputed waters to construct such a pipeline based on their bilateral agreements alone, but the project would still have to meet environmental standards – a condition that may enable Iran and Russia to continue challenging the Trans-Caspian project in future.
Over the past two decades, Russia and Iran have strongly opposed the Trans Caspian project, aimed to deliver Turkmen gas to EU through Azerbaijan, arguing their “environmental concerns”.
The agreement reached at the weekend, despite expectations, has also not finally resolved maritime borders, such that disputed but potentially rich oil and gas subsea reserves have yet to be worked out. But there is existing production in undisputed areas of the Caspian Sea, with Azerbaijan, Kazakhstan and Russia in particular each already producing significant gas and oil volumes.
Trans-Caspian project
Article 14 is important for Baku, because it plans to start 10bn m3/yr gas delivery to EU through the Trans Adriatic Pipeline (TAP) by 2021 initially, as the westernmost link of the Southern Gas Corridor. The European Union (EU) has exempted TAP from the Third Energy Package, but that excludes the extension stage which would double the transit capacity in mid-2020s.
Turkmen gas is one of the possible sources for TAP, though it now seems unfeasible, because of the distance it would have to travel, making it very expensive. Moreover no European clients are in serious talks about buying Turkmen gas as of now.
The original idea of a 30bn m3/yr Trans-Caspian pipe may indeed no longer be viable. Today, China is the only major importer of Turkmen gas, after Turkmenistan halted exports to Iran in January 2017 over a debt dispute. Turkmenistan also delivers a limited amount of gas to Azerbaijan, based on swap deal with Iran. Iran has dragged its feet over similar swaps to Turkey, but is more open about one to Armenia.
What did Moscow and Tehran get in return?
Russia and Iran got a lot of benefits from the weekend agreement, including a ban on the presence of army forces in the Caspian Sea area from outside the five signatory states. The convention contains 24 articles, mostly on military, security cooperation.
The signing represents a boost for Iran, at a time when the US is seeking to isolate it further and cut off its oil trade this autumn,. Russia too can point to ongoing regional cooperation with its neighbours – particularly with Azerbaijan which has tended to be more aligned to the west - at a time when Russian relations with EU states are strained.
The Caspian convention was agreed in principle on August 10, then formally signed at a ceremony in the Kazakh port city of Aktau August 12 according to reports. (Banner photo of Caspian Sea courtesy of Nasa)