Trans-Caspian Pipeline: Accessing Turkmen Volumes
The Trans-Caspian Pipeline, which would traverse the Caspian Sea from Turkmenistan to Azerbaijan, would link Europe to a new, substantial source of gas and could even have a multiplier effect upon the Southern Gas Corridor, said Mr. Thilo Muller von der Grun, Project Director, W-Stream Caspian Pipeline Company Ltd., in his talk with delegates at the European Gas Conference in Vienna Austria.
Turkmenistan, he said, has the potential and ability to supply gas to Europe. “It's supposed to be one of the cheapest gas sources in the world,” he commented.
Mr. Muller von der Grun, explained, “First of all, the Caspian Region isn't linked to Europe, so it would be a totally new source of supply and diversification of sources in general is always a good thing when it comes to ending monopolistic pricing structure.
“Also, the extraction economics in Turkmenistan and Azerbaijan are really attractive – so the price being low is a good argument for that.”
The Trans-Caspian Pipeline (TCP) has been a project being floated for some time now, but appeared on the European Commission's Projects of Common Interest in the autumn of 2013. W-Stream Caspian Pipeline Company Ltd., Mr. Muller von der Grun said, is simply helping promote the project at this stage, whose cost is estimated at EUR 2 billion. While no investors have been secured thus far, many potential investors, he said, have shown interest.
Accessing Turkmen volumes, he said, is a question of whether the country has the potential/willingness to supply the gas.
“By now there's little doubt that Turkmenistan holds huge gas reserves. Consultants have verified the magnitude stated as 17 TCM of natural gas in the BP statistical review, which is a conservative number. This is equivalent to 10% of the worldwide share of proven reserves,” he explained.
How accessible is the gas? Mr. Muller von der Grun said: “When you look at the structure of the fields, it is said to be comparable to Qatari field structure in terms of size and extraction economics.” He reported that one giant field had been developed in 3 years' time and its first stage capacity is 30 BCM/annum. “So, it's huge,” he added.
The unlocking of Caspian resources will be facilitated, he said, by the Southern Gas Corridor. The Trans Caspian Pipeline could account for 10-20% of that project's imports, the equivalent of 45-90 BCM/a, including new supplies from Shah Deniz II. Still, he admitted that TCP is a small capacity pipeline in consideration of EU goals.
“Obviously, the Trans Caspian Pipeline would only make the Souther Gas Corridor strategic. At later stages the additional gas would either be transferred through Turkey as well by upgrading that pipeline or an internally diversified route through the Black Sea crossing.”
Two so-called Projects of Common Interest, he said, are being discussed for the Black Sea crossing: White Stream from Georgia to Romania; or an LNG solution.
The first attempt by Turkmenistan to supply gas to Europe was in the mid 90s, he recalled, at a time of advanced planning for the Trans Caspian pipeline, but emergence of Blue Stream from Russia to Turkey made such an investment look unattractive. “Turkmenistan always mentioned the vision of supplying 30-40 BCM/annum to Europe, since they also have to balance their revenues with risks they are taking by Europe, also politically.”
Nabucco decision makers, he said, had not met the Turkmen requirement of 10 BCM/annum.
Meanwhile, he offered Turkmenistan's delivery of volumes to China as evidence of its willingness to do the same for Europe. “The pipeline currently under construction for 60 BCM/annum. It's already an export country; they're also constructing the “East-West” pipeline with 32 BCM/annum capacity from their production sites to the Caspian shore.
“To avoid politics they are building pipelines to their border,” he said of the Turkmenis. “Then, it's the task of the other players to link with these pipelines and get the gas from there.”
He reiterated that the will is there to deliver gas to Europe, but the rules regarding volumes and routes are challenges for Turkmenistan to overcome.
Mr. Muller von der Grun pointed out that Russia and Iran, other countries on the Caspian, are opposed to the building of such a pipeline, requiring full agreement from all coastal states according to a treaty.
Still, an environmental impact assessment is being conducted by the EU and World Bank whose report is pending. “The building of the pipeline must be economically viable according to the feasibility study,” he said. “It's only a small fraction of the price being invested in the other Southern Corridor pipelines and will multiply the capacity.”
-Drew Leifheit