Wednesday , 12 June 2024

Turkey Excludes Iran from Turkmen Gas Transit Route

iranintl – Turkey has signed an agreement with Azerbaijan to import and transit Turkmen natural gas, excluding Iran from Turkmen gas east-west land transit routes to the Mediterranean and Europe.

Turkish and Azerbaijani energy ministers signed a comprehensive deal in Istanbul on May 15 on capacity expansion for several natural gas pipelines as well as Turkmen gas transit.

Turkey’s energy and natural resources minister Alparslan Bayraktar said that the deal would allow for additional gas volumes from Azerbaijan and Turkmenistan to Turkey and Europe by 2030, although the exact volumes are yet to be announced.

Ankara and Ashgabat had already signed a gas purchase deal in March 2024.

Bayraktar also said that the Igdir-Nakhchivan gas pipeline would be operational soon.

Ilham Shaban the head of Baku-based Caspian Oil Research Center told Iran International that Turkmenistan can deliver a restricted amount of gas (2-3 bcm/y) to Azerbaijan by constructing a short subsea pipeline, connecting Turkmen offshore gas fields to Azerbaijan’s Azeri-Chirag-Guneshi block, or a significant amount of gas by constructing the 300-km Trans Caspian pipeline.

During last two decades Azerbaijan has been supplying gas to its Nakhchivan territory, a region geographically separated from the mainland, by swapping gas with Iran that has a border with the small Azerbaijani region. After launching the Igdir-Nakhchivan pipeline Baku can deliver its own gas to the landlocked exclave of the Republic of Azerbaijan through Turkey.

Currently two gas pipelines connect Azerbaijan and Turkey through Georgia: Southern Gas Corridor and Baku-Tbilisi-Erzurum.

Azerbaijan exported 24 billion cubic meters of gas in 2023, of which 2.5 bcm went to Georgia, 9.5 bcm to Turkey and 12 bcm to Europe via the Southern Gas Corridor.

EU and Baku sealed a memorandum of understanding in July 2022 to double Azerbaijani gas intake by 2027.

Iran is excluded from transit routes

Although Iran does not have any dedicated and direct pipeline to connect Turkmenistan to Azerbaijan or Turkey via its territory, it has a vast pipeline network for gas swap operations. Iran had already swapped about 4 bcm of Turkmen gas to Azerbaijan during December 2021 to January 2024, but Baku and Ashgabat recently stopped the deal. Iran was getting 15% of gas volume as swap fee; three times more than gas transit fees through Georgia or Turkey. Tehran was receiving gas from Turkmenistan that it used in its northern and northeastern regions, while delivering the agreed amount of gas from its northwestern regions.

Alongside Russia and Azerbaijan, Iran is also a natural gas supplier to Turkey, but in the past three years, deliveries have been interrupted frequently in winters due to Iran’s own severe domestic shortages. Iran is unable to boost its output due to lack of investments and Western technology, restricted by sanctions.

As a result, Turkey halved Iranian gas intake to 5.2 bcm in 2023.

The 25-year gas deal between Turkey and Iran will expire in 2026.

Last year, Turkmenistan exported 40 bcm of gas also to China and more limited volumes to Central Asian states, but with deep discounts.

According to Iran International’s calculations based on Chinese and Azerbaijani customs statistics, China imported Turkmen gas at $240/1000 cubic meters, or less than a half of Azerbaijani gas prices in European markets.

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