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Turkmenistan may be excluded from the Southern Gas Corridor

by Erika Green

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Turkmenistan is likely to be excluded from the Southern Gas Corridor (SGC) strictly for geopolitical reasons, according to Mehmet Öğütçü, founder and CEO of Global Resources Partnership.

Speaking to attendees Wednesday at International Petroleum Week in London (Kallanish Energy in attendance), Öğütçü said the SGC is “the longest pipeline built so far,” stretching over 2,100 miles across several countries. It originates at the Caspian Sea, through Turkey and Greece to reach Italy. Total investment in the massive project was roughly $40 billion, and operations are expected to start in 2020.

The involvement in the project of countries in the Eastern region of the Caspian, such as Turkmenistan, may be opposed by Russia and Iran. In the last decade, Turkmenistan dropped Iran as an export destination due to a dispute over money. While it’s still delivering natural gas to Russia, said deliveries offer “insignificant” quantities of the fuel.

There are natural gas exports to China, but “not as much as Turkmenistan wants,” with projected decreases because of the Power of Siberia Pipeline, which will deliver Russian gas to Western provinces of China.

Turkmenistan must diversify its market, experts said. There have been proposals for a pipeline connecting to Asian countries such as Pakistan, India and Afghanistan. A 2018 note published by the Oxford Institute for Energy Studies reported some miles of this route (the TAPI, or Turkmenistan–Afghanistan–Pakistan–India Pipeline) already have been laid out, although Öğütçü said at the conference he does not think this project would actually be built because of expected organizational issues.

There have been talks to join SGC but it could be problematic because of political issues. There are unresolved disputes about ownership of certain areas of the Caspian Sea with other countries near it.

Aside from that, development of Caspian pipelines may be opposed by neighboring countries Iran and Azerbaijan who have their own commercial interests. Moreover, economic factors may be unfavorable due to transportation costs of Turkmen gas to Europe, especially considering Russia’s highly competitive prices for the fuel.

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