The 182-kilometer Turkmen-Iranian pipeline starts "modestly" with the pumping of 8 billion cubic meters (bcm) of Turkmen gas, but will meet the energy requirements of Iran's Caspian region. Its annual capacity is however 20bcm, which will allow Iran to export its own gas to the east.
The pipeline could be extended through Turkmenistan to the northern shore of the Caspian sea and from there, be connected to a gas pipeline Russia and China are discussing that would link the Russian Black Sea port of Novorossiysk to Alashankou on Sino-Kazakh border.
Russia, Iran and Turkmenistan hold respectively the world's largest, second-largest and fourth-largest gas reserves and China needs a lot of energy and is willing to invest heavily to get it.
At the same time, Moscow wants to remain Europe's main gas supplier. Chinese competition in Central Asia and the Caspian region are thus not a major irritant. Moscow in fact is already well-entrenched in the area with its own installations and has developed its own ties with the region's countries. Thus, no energy flows from the region towards Europe. At the same time, Moscow has offered Turkmenistan a better price than China for its gas. Indeed, Russia relies on Turkmen gas for its domestic need and exports its own gas to Europe at a higher price.
Iran is isolated by Western sanctions and is turning more and more eastward and towards Russia.
Iran and Turkmenistan have forged closer ties recently, thanks in part to the intervention of Russian President Dmitry Medvedev.
The overall situation is complicated by Turkey's desire to become a hub for energy flowing to Europe. For this reason, the Turkish government has downplayed the existing 2,577km pipeline connecting Tabriz in north-western Iran with Ankara.
This intricate pattern of relations spells the end of US policy towards Caspian oil and gas, which was designed to bypass Russia, whilst keeping China out and Iran isolated.
Russia is now planning to strengthen its ties with Azerbaijan, further undermining Western efforts to engage Baku as a supplier for Nabucco. In tandem with Russia, Iran and Azerbaijan in December inked an agreement to deliver gas to Iran through the 1,400km Kazi-Magomed-Astara pipeline.
Conscious that it has fewer cards to play, Europe is pushing for Russia's South Stream and North Stream, which will supply gas to northern and southern Europe.
The stumbling blocks for North Stream have been cleared as Denmark (in October), Finland and Sweden (in November) and Germany (in December) approved the project. Construction should begin in the spring.
The new pipeline will bypass Soviet-era transit routes via Ukraine, Poland and Belarus and run from the north-western Russian port of Vyborg to the German port of Greifswald along a 1,220km route under the Baltic Sea.