Europe Gets Closer to Caspian Gas as Turkmens Seek Pipe Talks
Turkmenistan, holder of the world’s fourth-largest natural-gas reserves, said it would negotiate with Azerbaijan on a pipeline across the disputed Caspian Sea, potentially allowing exports to Europe.
Turkmen President Gurbanguly Berdymukhammedov told his Russian, Kazakh, Iranian and Azeri counterparts at a summit on the delineation of the Caspian Sea in Baku, Azerbaijan, that the two countries had the right to build a link across their own territorial waters without the approval of other states, according to the Turkmen state website.
The Caspian littoral states have yet to agree on the legal status of the body of water, which is important to determining what approvals projects require and within what framework commercial entities can invest. The European Union has pushed to include Turkmen gas in Southern Corridor transit plans, which aim to diversify the 27-nation bloc’s imports away from reliance on Russia by building links through Turkey.
“Europe has no need to worry,” Baymurad Hojamuhammedov, deputy head of Turkmenistan’s Cabinet of Ministers, said in the capital Ashgabad today, regarding the availability of potential gas volumes.
Turkmenistan is building infrastructure with 40 billion cubic meters capacity to transport gas west, Hojamuhammedov said. A 30 billion cubic meter capacity East-West pipe from the country’s vast gas reserves in the east to the Caspian coast in the west is already under construction, he said.
Petronas Caspian Project
Petroliam Nasional Bhd., Malaysia’s state oil company known as Petronas, will produce 5 billion cubic meters of gas next year from an offshore Caspian project and is currently unable to ship the fuel, Hojamuhammedov said.
Russia stopped buying Turkmen gas for most of last year after a collapse in world demand and an explosion on the pipe connecting the two countries. A potential route through Iran has been stalled as companies are wary of international sanctions.
Russia, Turkmenistan’s traditional buyer via soviet-era infrastructure and the world’s largest gas exporter, has reduced purchases from 40 billion cubic meters in 2008 to about 10 billion cubic meters this year.
Hojamuhammedov would not say how much gas Turkmenistan would supply China this year after opening a pipe east in 2009. It plans to export 17 billion cubic meters next year, he said.
Border Disputes
The Caspian pipe talks will be taken as a separate issue from border disputes between the two nations over areas with large amounts of tapped and potential oil and gas resources, Hojamuhammedov said.
Part of the BP Azerbaijan-led Azeri-Chirag-Guneshli project lies in waters claimed by both Turkmenistan and Azerbaijan, as does a yet-to-be-tapped block, which Turkmenistan awarded to Canadian explorer Buried Hill Ltd.
The EU has sponsored talks urging Azerbaijan and Turkmenistan to display the political will to work with each other on pipeline projects as well as describe their own rights and the rights of companies within their waters apart from the border dispute.
The Turkmen president’s statements are “very encouraging” for transit projects from the region to Europe, said Olav Skalmeraas, a Statoil ASA vice president for natural gas.
Statoil is a partner in the Azeri Shah Deniz gas field which will make a final investment decision on a $20 billion second phase by mid next year, he said. The investment decision is contingent on deals to buy the gas which in turn will be necessary to determine a transit route, he said.
With Turkmenistan involved, there may well be enough gas for several pipeline projects, which are currently competing for gas from Shah Deniz, the only resource to fill their pipes currently ready for sales deals, he said.
OMV AG-led Nabucco, Edison SpA’s Interconnector Turkey- Greece-Italy and the Trans Adriatic Pipeline have all sought gas produced and sold by the BP Plc-led field.
To contact the reporters on this story: Stephen Bierman in Ashgabat via Moscow at sbierman1@bloomberg.net.
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net
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