Ashgabat (AsiaNews) - Turkmenistan is one of the world’s largest gas producers, and its gas exports form the basis of the country’s prosperity; yet, despite its vast reserves, Ashgabat has never managed to find enough buyers. One reason is the underdeveloped gas transport system, whilst another lies with the Turkmen themselves, who often unilaterally alter the terms of agreements, undermining the trust of their partners.
Agreements are usually honoured with countries that purchase large volumes of gas over the long term, such as China; however, where there is no rigid formula binding Ashgabat to specific obligations, it behaves opportunistically, as was the case with Iran and with supplies to Turkey, which began last year and were soon halted.
For the same reason, Turkmenistan is cautious about the Trans-Caspian gas pipeline, the construction of which will require the coordination of supplies with several countries; however, due to this very unpredictability, even the TAPI project – a far riskier venture through Afghanistan and Pakistan in which Ashgabat is prepared to invest almost single-handedly – is already raising doubts amongst its participants.
China has been the largest buyer of Turkmen gas for over fifteen years, purchasing up to 40 billion cubic metres of gas annually. Turkmenistan currently receives around 335–340 dollars per thousand cubic metres for this gas, 30 per cent more than the price of Russian gas supplied to China.
This is significantly lower than exchange prices: gas on the market currently costs an average of around $700 per thousand cubic metres, but the spot price is volatile, whereas a long-term contract guarantees a fixed sales volume for years to come – and therefore predictable revenues – even if the price is lower than the market peak.
Moreover, the price of long-term contracts also fluctuates in line with the price of oil, but this happens with a time lag; for example, the rise in the price of oil caused by the closure of the Strait of Hormuz is not immediately reflected in the price of gas, but only after a further recalculation using various formulas.
Russia has long been another major buyer of Turkmen gas; historically, it was supplied to Moscow via the Soviet Centrasia pipeline, and in the early years of independence, Ashgabat simply had no alternative routes.
The price of gas at that time was not determined by a market index, but by direct negotiation: the parties agreed on a specific amount for a given delivery point.
It was not until the 2000s that Moscow and Ashgabat linked the price of gas to that of oil, but in 2009 oil prices rose sharply, and Turkmen gas began to cost Gazprom $375 per thousand cubic metres. The Russian gas monopoly found this price excessively high and tried to renegotiate the terms, but the Turkmen refused.
Generally speaking, Russia purchased Turkmen gas not so much for its own use as to resell it to Europe via its own gas transmission system. After 2022, Europe largely stopped buying gas from Russia, so purchasing from Turkmenistan became pointless.
Europe would certainly like to buy Turkmen gas directly, but an alternative pipeline bypassing Russia does not yet exist, and even if one were to be built, judging by the experience of other partners, Ashgabat would prove to be a very difficult negotiator.
Europe has been promoting the idea of a gas pipeline bypassing Russia since the late 2000s: it would run along the seabed of the Caspian Sea, reach the countries of the South Caucasus and then, via Turkey, Europe.
The project was named the Trans-Caspian Gas Pipeline and was included in the broader European Southern Gas Corridor initiative. Since 2022, when the EU once again found itself in urgent need of additional gas supplies, the Caspian Sea project has been revived. Azerbaijan, which supplies Europe with gas from the Shah Deniz field, cannot fill the pipeline on its own: it needs Turkmen gas.
It would seem that this is exactly what Turkmenistan had been hoping for: new customers and reduced dependence on China, but Ashgabat has never shown the same level of interest in this project as, for example, in the TAPI, the Turkmenistan–Afghanistan–Pakistan–India gas pipeline, despite the fact that it crosses unstable and high-risk Afghanistan.
The problem lies in the very structure of the projects: in the TAPI, Ashgabat is the main owner of the pipeline and negotiates directly with buyers, without intermediaries. Ashgabat’s unpredictability is not only a cause for concern in Europe, and if Turkmenistan genuinely hopes to diversify its exports – both to neighbouring countries and to more distant markets such as Europe or the Middle East – it will have to make compromises, rather than simply imposing its own terms. Otherwise, it will have no one to negotiate with apart from China.
