Turkmenistan Makes Europe Worry on Gas

As though it weren’t enough for Nabucco to have to compete against the Gazprom-Eni South Stream project, locking the EU into just one supplier from the East. Then Turkmenistan had to go and pull a move out of the Kremlin’s book and cut off supply – raising additional worries that even if Europe were able to diversify and get some Central Asia gas without passing through Russia, there could still be problems anyways. Reuters reports on the Caspian problem behind European energy security:

Turkmenistan, which Brussels has been trying to lure into becoming a major Nabucco supplier, cut off supplies to Iran at the end of December, creating a domino effect that stretched to Greece and raising doubts about its reliability as a supplier. “Last week’s developments haven’t exactly helped Nabucco’s arguments in favour of energy security,” said Jonathan Stern of the Oxford Institute for Energy Studies.

“We have a situation where Turkmenistan has not supplied Iran, Iran has not supplied Turkey, Turkey has not supplied Greece. And this is the corridor that people want in Europe because they are worried about unreliable Russian gas,” he said. (….)Esser and other experts say the EU had to bring investment to develop new fields and infrastructure in Kazakhstan and Turkmenistan, where reserves are rich but infrastructure is lacking beyond pipelines leading to Moscow and China.Gazprom buys the bulk of Turkmen gas production, or around 50 bcm, as well as volumes from Kazakhstan, for re-export to Ukraine and western Europe. And that agreement was revised last year to expand the existing pipeline infrastructure by as much as 20 bcm, pushing imports to Russia higher.But analysts say the problems only begin with Moscow’s influence.”Gas coming from central Asia, apart from being largely reserved by Russia, has the problems of infrastructure and regional politics to establish that infrastructure,” said Turkey-based independent energy analyst Necdet Pamuk.Even if European investment were to break Russia’s stranglehold on the country, it is unclear whether Turkmenistan would open up to foreign investment and play by the rules.”If they have investment, they shouldn’t change the conditions or allow for double standards,” said Fatih Birol, chief economist at Paris-based International Energy Agency.