Appetite for Turkmen gas could rise in China, Turkey and Europe amid Hormuz crisis

Chinese President Xi Jinping repeated long-stated calls for expanding cooperation with Turkmenistan in the natural gas sector as the country’s Leader of the Nation Gurbanguly Berdimuhamedov paid a state visit to Beijing.

China has long been officially committed to raising its intake of natural gas from Turkmenistan – the Central Asian country vies with Russia for the number one spot in the piping of gas to the Chinese market – but progress on delivering extra pipeline capacity that could enable the gas transit expansion has been grindingly slow in recent years. There is the possibility, however, that the conflict in the Middle East, and the consequent blocking of tankers carrying gas to world export markets via the Strait of Hormuz, has concentrated minds in China, with gas that can be obtained via Central Asian and Russian land routes suddenly seeming that much more attractive.

Turkmenistan, on the other hand, is already almost entirely dependent on China in terms of gas export sales, thus while it may be keen to sell more gas to Beijing, it may also continue to look at ways it might manage to get gas to the Turkish and European markets.

Berdimuhamedov’s visit to China took place from March 17-18.

Chinese media reported that at a meeting with Berdimuhamedov at the Diaoyutai State Guesthouse in Beijing, Xi also called for expanding cooperation in artificial intelligence and the digital economy.

Turkmen gas is supplied to China through three branches of the Central Asia-China gas pipeline, namely A, B and C. They are laid along a Turkmenistan-Uzbekistan-Kazakhstan-China route and have a total capacity of 55bn cubic metres (bcm) of gas per year. An update on progress in laying a fourth branch of the pipeline, which will pass through Uzbekistan, Tajikistan and Kyrgyzstan and bring the total capacity to 85 bcm, is long overdue.

John Roberts, an energy security expert at the UK-based consultancy Methinks, in comments reported by Azatlyk, warned of the danger of Turkmenistan, the gas reserves of which are by some estimates the fourth largest in the world, becoming solely dependent on China for its energy exports.

He said: “With China, it’s like putting all your eggs in one basket. Do you [Turkmenistan] really want that? Let me give you an example. In 2012-13, when China first started building the pipelines, they were talking about sending up to 40 billion cubic metres of gas from Turkmenistan to China by 2016. But over the last five years, and I think for a long time, these figures have been frozen at about 32-33 billion cubic metres.”

In Roberts’ eyes, Beijing appears to be using potential energy deals with the Turkmens to negotiate more favourable terms on gas from Russia.

"In other words, the Chinese side seems to be saying, 'We have the opportunity to produce gas in Turkmenistan and buy gas from Turkmenistan. But we don't actually want to increase imports from you. We want to increase it from Russia. But we can use you as a pressure tool to get a more favourable deal with Russia,'" he added.

According to figures provided by Russian state news agency TASS, citing data from the General Administration of Customs of China , China's gas imports from Russia expanded by 17.1% last year to $9.41bn.

Gas exports from Turkmenistan to China, on the other hand, decreased by 12.1% to $8.41bn.

Roberts pointed to an option Turkmenistan has known about for years, but has not taken up. To get gas to Turkey/Europe, it could “very quickly” connect the offshore terminal at the Petronas-operated Magtymguly field in the Caspian Sea with nearby fields in Azerbaijan, such as the BP-operated Azeri-Chirag-Guneshli oil field or the Absheron gas field operated by TotalEnergies.

“This would require a pipeline of only 78 kilometres [48 miles] in the first case, and more than 100 kilometres [62 miles] in the second. These would be local and simple solutions that rely on existing infrastructure to the maximum extent. The gas would then go from Azerbaijan to Turkey.”