Trans-Caspian Gas Pipeline

This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.

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Trans-Caspian Gas Pipeline (TCP) (Russian: Транскаспийский газопровод) is a proposed pipeline which would transport gas from Turkmenistan to Azerbaijan across the Caspian sea via an undersea pipeline. It is also known as the South Caucasus Pipeline Future Expansion (SCPFX), due to its connection with the South Caucasus Gas Pipeline.

Location

The pipeline would start near Balkanabat in Turkmenistan, run to Belek and Turkmenbashi on the western shore of Turkmenistan, and transport gas via an undersea pipeline to Sangachal Terminal on the eastern coast of Azerbaijan.

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Project Details

Phase I

• Owner: W-Stream Caspian Ltd
• Operator: W-Stream Caspian Ltd
• Parent Company: Turkmengaz (90%), Georgian Oil and Gas Corporation (10%)
• Capacity: 16 billion cubic meters per year
• Length: 300 km / 186 miles
• Diameter: 36 inches
• Status: Proposed
• Start Year: 2029
• Cost: $1,785,000,000
• Financing:
• Associated infrastructure: South Caucasus Gas Pipeline, Trans-Anatolian Gas Pipeline, Trans-Adriatic Gas Pipeline, Azerbaijan-Georgia-Romania Interconnector (AGRI)

Expansion

• Owner: W-Stream Caspian Ltd
• Operator: W-Stream Caspian Ltd
• Parent Company: Turkmengaz (90%), Georgian Oil and Gas Corporation (10%)
• Capacity: 16 billion cubic meters per year
• Length: Capacity expansion only
• Diameter: 36 inches
• Status: Proposed
• Start Year: 2025
• Cost:
• Financing:
• Associated infrastructure: White Stream Gas Pipeline

History

The Trans-Caspian pipeline has been discussed since 1996, but has faced many obstacles which has made it seem far from realistic until recent years. Ever since the fall of the Soviet Union, the legal standing of Caspian Sea territory between the former Soviet states of Azerbaijan and Turkmenistan had been in question. In addition to legal ambiguities, there has been far too many countries surrounding the Caspian Sea involved in the project negotiations making the project difficult to get off the ground. Both Russia and Iran have also been historically opposed to such a pipeline project. However, the legal issues surrounding the Caspian Sea have been slowly resolved over time and Europe's desire to build the Southern Gas Corridor have revived the potential for the development of the TCP.

In 2006, due to a dispute between Russia and Ukraine, gas deliveries from Russia ceased and Europe was faced with a short supply of gas. Interest in the project increased and slowly fizzled until the more recent Russian-Ukranian crisis sparked renewed interest in the TCP.

Background

The project is planned in two phases; with the first expected to allow for 16bcm/year of gas to be carried, and a second phase that consists of the expansion of this capacity to 30 bcm/year.

The Trans-Caspian Pipeline is planned as part of the Southern Gas Corridor (SGC) and has been identified as a project of Common Interest of the EU (PCI). While the interest in the TCP project has been renewed since 2011, the political difficulties of the region may make the project non-viable.

In addition to the political difficulties surrounding the pipeline project, the TurkStream Gas Pipeline may bypass the need for the Trans-Caspian pipeline, possibly making the project irrelevant and commercially non-viable. Since the TurkStream Gas Pipeline would deliver Russian gas across under the Black Sea into Turkey and further west, the TCP might be considered unnecessary. The European Network of Transmission System Operators for Gas lists the projection its TYNDP as "TRA-A-561."

According to news and analytical reports from 2019 and 2020, this project maintains its importance for the EU as it seeks to diversify its gas imports. In January 2021, Azerbaijan and Turkmenistan have signed a landmark agreement to jointly develop a long-disputed Caspian gas field (named "Kepez" or "Sardar", renamed in 2021 to "Dostlug/Dostluk"). This marks an important step towards further possible agreements which may include developments related to this pipeline. According to some analysts, this agreement removes the last obstacle to the construction of the Trans-Caspian Gas Pipeline.

In March 2023, Azerbaijani President Ilham Aliyev mentioned that Azerbaijan was ready to provide necessary transit for its partners across the Caspian, if they decided to build the pipeline, however, there was no certainty as to who would bear the burden of financing the construction: European companies or it would be money coming from the EU.

In July 2023, the Ministry of Foreign Affairs of Turkmenistan published a statement for media saying that "the construction of the Trans-Caspian pipeline was directly related to the delimitation of the seabed between Turkmenistan and the Republic of Azerbaijan. In addition, Turkmenistan is convinced that there are no political, economic, financial factors hindering the construction of the gas pipeline. On the contrary, the Trans-Caspian pipeline is an absolutely realistic project, justified from an economic point of view, capable of making a tangible contribution to ensuring energy security in Eurasia, providing long-term and uninterrupted access to sources of raw materials for European consumers, while observing the obvious benefits and interests of the transit side. Based on this, Turkmenistan, being committed to the strategy of diversifying energy flows, expresses its readiness to continue cooperation with partners in the implementation of the Trans-Caspian pipeline project".

In May 2024, Turkish Energy Minister Alparslan Bayraktar and Azerbaijani Economy Minister Mikayil Jabbarov signed an agreement on gas sector cooperation between Ankara and Baku. An important aspect of the agreement is the transit of Turkmen gas to Turkey through Azerbaijan and Georgia.

As of August 2024, there have not been any developments in the implementation of the project.

Political opposition from Russia and Iran

The main goal of the project is to transport natural gas from Turkmenistan and Kazakhstan to Turkey and Europe, bypassing both Russia and Iran. So far, the effort has produced no results because both countries have been blocking the project in different versions of its implementation. Russia does not want to lose the European market while Europe is sharply reducing its consumption of Russian gas and plans to stop consuming it altogether by 2027. However, according to the Convention on the Legal Status of the Caspian Sea, which the five countries bordering the Caspian signed in 2018, all five countries must grant their approval before environmentally sensitive projects may take place.

Proposal for two pipelines

In May 2019 a pre-FEED (front end engineering and design) study began for a plan to build two Trans-Caspian pipelines. The first pipeline would follow an expanded SGC route (South Caucasus Gas Pipeline, Trans-Anatolian Gas Pipeline (TANAP), and Trans-Adriatic Gas Pipeline (TAP)) to a final destination of Italy. The second pipeline would follow the White Stream route from the Georgian coast, entering the EU in Romania and reaching western Europe via existing pipelines in Romania, Moldova, Ukraine, Slovakia and onwards.

Financing

The pipeline has been approved for inclusion on the European Commission's Projects of Common Interest list, meaning it is eligible to receive public funding from the EU. According to the European Commission, "TCP: Offshore pipeline in the Caspian Sea with a length of 300 km and an ultimate capacity of 32 bcm/a will branch-off at a connection with the East-West pipeline in Turkmenistan or, for the first stage, from a collection point of offshore Caspian production/treatment in Turkmenistan. It will feed into Sangachal terminal/SCP in Azerbaijan. SCPFX: Upgrade of the existing SCP pipeline system between Azerbaijan and Turkey via Georgia with throughput capacity upgrades of 5 bcm/y by 2022 (on top of the expanded capacities under SCPX project). SCPFX project currently envisages the addition of a compressor station in Azerbaijan and pipeline looping along the route of SCP." It has already been approved for €17,243,859 EUR ($19,156,892.72 USD). Although none of the countries directly involved are EU members, the gas associated with the pipeline will reach the EU via markets in Greece and Italy.