The main objective of the summit was to provide strong political support and concrete commitments for the development of the Southern Corridor, including the trans-Caspian interconnection, which immediately brings to mind the significance and importance of Turkmenistan above all, because Turkmenistan possesses the world’s fifth largest reserves of natural gas. It is estimated that the country’s reserves stand at 72.67 trillion cubic meters. It currently produces about 70 billion cubic meters of gas annually and plans to extract more. Its export commitments are substantial. Russia is, of course, the number one customer with 50 billion cubic meters, followed by Iran, with 8 billion cubic meters.In fact, Turkmenistan’s significance and importance with regards to gas supplies to Europe was noticed by the EU two years ago, when this country made a commitment to the EU to supply 10 billion cubic meters of gas. This commitment is still valid and, on top this, German energy giant RWE made an agreement last month with Turkmenistan for offshore gas exploration and future gas deliveries to the EU.
Under the agreement, the RWE and Turkmenistan will cooperate closely on the possibilities for starting of the delivery of Turkmen gas to Europe and Germany. The sides will set up a long-term partnership to transport Turkmen gas to the relevant countries’ borders and then export it to international markets.
In addition, under the same agreement, the RWE will explore and develop gas fields in Turkmenistan’s continental shelf in the Caspian Sea. According to Turkmen sources and officials, Turkmenistan has given its offshore Block 23 to the RWE as a first step, with additional blocks to be added in due course. Exploration on the block is to start this year.
The agreement with the RWE is significant in many respects. Above all, the RWE is a very big and strong company. It is Germany’s largest energy producer and supplier in terms of both nuclear and other classic energy sources and, at the same time, the second largest gas supplier in the country. The RWE has different sources of gas supply. In other words, it is not dependent on the Russian supply of gas, generally. Therefore, it can ignore Russia if need be.
The RWE is also partner in the Nabucco project, which is a natural gas pipeline supported by both the European Union and the US. It joined the project about a year ago. Last year, the RWE and the Austrian OMV set up the Caspian Energy Company (CEC) to develop trans-Caspian solutions for the delivery of Turkmen and other Central Asian gas to Europe. It is connected with the EU Commission’s project to enlarge the initial Nabucco idea into an expanded Southern Corridor Project, which of course gives priority to trans-Caspian undersea pipelines. It is reported that to realize this, the RWE board chairman, Jürgen Grossmann, and others recently had intensive talks in Turkmenistan.
That, of course, is significant for both the EU and Turkmenistan. After all, any breakthrough with regard to Caspian undersea lines will open the region’s gas resources to the outside world, independent of Russia. However, for this happen, the legal status of the Caspian Sea first has to be resolved. In this regard, there have been some positive developments, as suggested by Russian Foreign Minister Sergei Lavrov, who said recently that the Caspian littoral states had reached an understanding on the delimitation of the sea.
If for some reason this agreement fails, then other alternatives might be brought forward, namely the pipeline link could be achieved either as a coast-to coast plan or could be realized by connecting Turkmenistan’s and Azerbaijan’s offshore gas installations. Another alternative is a link that could be realized by shipping gas across the Caspian Sea.
All in all, the RWE’s Turkmenistan connection and agreement is a major development for the Southern Corridor.
