Photo: iStock
Szabolcs Veres
28/07/2025 08:27
Firstly, energy prices have reached unprecedented heights, causing considerable economic strain. Secondly, the winter season has been notably colder than in previous years, further exacerbating energy demands. Thirdly, the ongoing Russian-Ukrainian war has led to economic downturns and created domestic political tensions within the European Union. Despite the decline in European energy prices, they continue to exceed their pre-crisis levels. Concurrently, the European economy's strategic direction in meeting its energy demands remains ambiguous. One potential destination for such a mission would be Central Asia, with Turkmenistan serving as a notable example.
The majority of Turkmenistan's geographical area is characterized by desert landscapes. The economy of this Central Asian country is primarily reliant on agriculture and the export of energy resources, namely natural gas and crude oil. The agricultural sector of Turkmenistan is predominantly focused on the production of cotton, which is primarily intended for export markets, and wheat, which is utilized to satisfy domestic demand. Despite the fact that agriculture constitutes approximately 8-9% of Turkmenistan's GDP, industry is responsible for employing nearly half of the Central Asian country's workforce, amounting to approximately 1 million individuals.
Approximately 25% of the country's GDP is derived from hydrocarbon exports, with the majority of these exports being natural gas destined for China. Furthermore, Ashgabat is supporting two additional initiatives to bring the country's energy resources to foreign markets. One such project is the Trans-Caspian pipeline, which would facilitate the transportation of natural gas to Europe, and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. However, the latter project currently faces significant obstacles in the domains of financing and security.
The sanctions imposed on Russia by the European Union have had significant ramifications, including a substantial increase in energy prices across the eurozone. This unfavorable outcome has been attributed to the lack of strategic foresight and the haphazard implementation of these sanctions by EU countries. Concurrently, the EU's strategic shift away from Russian hydrocarbons has led to a gradual reliance on alternative global economic actors, notably the United States and its liquefied natural gas (LNG) exports. This dynamic has prompted EU countries to explore alternative hydrocarbon sources, prompting heightened attention from Brussels toward Central Asian countries. These nations possess abundant (low-cost) resources, exemplified by Kazakhstan, a prolific oil producer, and Turkmenistan, which possesses substantial natural gas reserves.
For Turkmenistan, which currently possesses the world's fourth largest reserves of natural gas, the expansion of its natural gas exports, or the diversification of these exports, as it is popularly referred to in the present day, has been an unresolved issue for decades. This issue has become so crucial for the Turkmen economy that, starting in 2020, it has taken on strategic importance. This is due to the country's long-standing dependence on the Chinese market, which is the primary importer of Turkmen natural gas. Ashgabat currently exports approximately 40 billion cubic meters of gas annually via three pipelines to this market. This represented a one-sided dependency for the Central Asian country, as evidenced by Turkmenistan's status as the largest supplier of blue fuel to China in the first half of 2024. Exports to China amounted to $5.67 billion, accounting for nearly 50% of Turkmenistan's total gas production. In 2023, Turkmenistan's annual natural gas production was 80.6 billion cubic meters. This phenomenon is particularly noteworthy in light of the country's substantial increase in gas production over the past two decades, despite its current share of global production remaining approximately 2%.
Nevertheless, Ashgabat's plans for natural gas production and exports are quite ambitious. In October 2024, Rustem Tekajev, the head of the gas transportation and supply department of the Turkmen state concern Turkmengaz, announced that Turkmenistan intends to increase its natural gas production volume to 116 billion cubic meters by 2029, with more than half of this intended for export—a substantial increase.
However, such ambitious plans raise pertinent questions regarding the availability of production capacity in Turkmenistan and the feasibility of achieving such an increase in a relatively brief period (three years) without the necessary technological and logistical support. Moreover, it is imperative to ascertain the intended destination and purchasers of the gas, as well as the manner in which Ashgabat intends to market and distribute this commodity.
The solution to this issue can be found in the strategies previously outlined by Ashgabat. Turkmenistan has been deliberating for decades on whether to enter the European gas market via Russia or to "bypass" Moscow. The Russian-Ukrainian war has created an unexpected opportunity for Turkmenistan to do so. In the early 2000s, as a potential alternative to the export of natural gas through Russia, the proposal of the Nabucco gas pipeline through Azerbaijan to European countries emerged. This initiative, which was referred to as the "project of the century," aimed to bypass Russia as a key player in the global energy market. However, due to a multitude of challenges, including substantial financial costs and environmental concerns, the project never advanced beyond the conceptual stage.
Concurrently, China's direct involvement and financial backing led to the initiation of the Central Asia-China gas pipeline in 2009. This pipeline traverses Turkmenistan, Uzbekistan, and Kazakhstan, with the capacity to facilitate the transportation of nearly the entirety of Turkmenistan's gas exports. Consequently, this development has once again led to the diminution of the prominence of the Nabucco project.
A comparable scenario has emerged with the Trans-Caspian or Caspian Sea gas pipeline, which has been awaiting implementation since the 1990s. The project entails the construction of a gas pipeline that will be situated along the seabed of the Caspian Sea. According to the plans, this would establish a connection between Turkmenistan and Azerbaijan, facilitating the transportation of natural gas to the European Union via Türkiye by leveraging existing infrastructure. It is noteworthy that analogous proposals have been put forth for the Trans-Anatolian (TANAP, traversing Azerbaijan, Georgia, and Türkiye, culminating at the Greek border) and the Trans-Adriatic Pipeline (TAP, a component of the Southern Gas Corridor, intended to convey Azerbaijani gas to Europe). These pipelines are estimated to transport approximately 30 billion cubic meters of gas annually.
However, in the context of the prevailing global energy landscape, another project that has been under discussion for an extended period, the construction of the Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI), is acquiring increasing significance for Turkmenistan. Ashgabat's interest in the TAPI project has exhibited a steady growth in recent years, as evidenced by the country's plans to increase its natural gas production to 116 billion cubic meters. This volume is close to the specified capacity of TAPI, which is 33 billion cubic meters. Turkmenistan would be willing to fulfill this volume.
The financial estimates for the project, initiated in the early 2010s, currently range from $9 billion to $10 billion. The construction of the Turkmen segment of TAPI commenced in 2015. According to the project's initial timeline, deliveries through the completed pipeline were expected to commence in 2017. However, the geopolitical dynamics in Afghanistan, particularly the withdrawal of US troops and the subsequent rise of the Taliban, have resulted in significant delays. However, the current government in Kabul is making serious efforts to complete the Afghan section of the pipeline as soon as possible. Despite the project's uncertain circumstances, TAPI appears to offer more viable and advantageous prospects for Ashgabat than European export markets. The project's implementation could potentially lead to the creation of new markets in South Asia for the country, thereby providing a more substantial and stable economic outlet in comparison to Europe. Furthermore, in contrast to the gas supplies to China and the EU, where Turkmenistan is in many ways a competitor to Russia, TAPI is also viewed favorably in Moscow. This is also an important factor for Ashgabat, which has recently come into conflict with Moscow due to Gazprom's "activism" in Central Asia. This would create a so-called "triple gas alliance" between Russia, Kazakhstan, and Uzbekistan.
However, when considering the broader context of Turkmen gas exports, Ashgabat's endeavors to diversify its natural gas export destinations appear to be materializing. While the prospect of accessing EU markets may appear enticing, it is imperative to recognize the substantial financial investments and inherent risks associated with such endeavors. This is due to the fact that Ashgabat's partners in this project, ranging from Brussels to Ankara, are not inclined to invest in the construction of new gas pipelines. Instead, they intend to meet energy needs with additional liquefied natural gas from the US and Norwegian natural gas.
Consequently, Turkmenistan's geopolitical shift from the West (i.e., Europe) to the South, coupled with access to South Asian markets via TAPI, could yield substantial benefits without compromising Ashgabat's relations with China and Russia. Consequently, the Turkmen government is now increasingly aligning its policies with these principles, intensifying its engagement in markets where it perceives tangible financial benefits and opportunities that align with its national interests. This shift in policy is evident in its decision to discontinue support for questionable projects funded by European entities.
The author is a researcher at the Eurasia Center