Turkmenistan seeks an arrangement leading to the export of 30-40 billion cubic metres per year (bcm/y). Such a development makes political and economic sense for Turkmenistan, and in Turkmenistan this is believed so. Such a position seemed to be an obstacle to the TCP’s implementation in the late 1990s, after Turkey decided in favour of Blue Stream gas imports from Russia (under the Black Sea). As a result, Turkey scaled back its agreement with Turkmenistan from 30 bcm/y while making no indication or commitment for any potential expansion of any smaller volume. That situation has now changed.
There is a clear place for Turkmen gas in the European energy market, including in Central Europe. Turkmenistan’s gas potential for Europe, in summary, is outstanding for seven important and simple reasons:
- Large quantities can be produced.
- Production cost is low.
- The East-West Pipeline inside Turkmenistan is in place and ready to enter service.
- Export can therefore start at any time.
- No further investments within Turkmenistan are necessary.
- The political will to export to Europe exists in Turkmenstan.
- The country needs the cash revenue.
White Stream: The Project Concept
White Stream makes a major contribution to the opening up and strengthening the transport routes for direct gas trade between the countries of the Caspian Sea basin and Europe. It will transport gas from third countries and land it directly within the European Union, thus addressing the future European supply-demand balance.
The foundation of the White Stream project concept is to increase security of supply through diversification. White Stream contributes to gas infrastructure diversification by helping Member States to fulfil the minimum criteria on security of gas supply, including the ‘N–1 principle’ in Romania and Bulgaria as well via the existing Trans-Balkan gas transit lines. In case of materialisation of the interconnector between Bulgaria and Serbia, White Stream could improve the security of supply in Serbia and Bosnia and Hercegovina as well. Intrinsic to the White Stream project concept, is to reinforce interconnections between areas, and between Member States’ transmission systems.
All that is in keeping with Georgia’s intentions expressed by the act of its recent accession to the Energy Community. The White Stream project concept is built on the increased integration of Member States’ national markets, the cooperation of their system operators co-operate and the bringing of ‘gas islands’ into a genuine single gas market.
Why Turkmen Gas via White Stream
The latest trends in the European gas market highlight Turkmen gas as the most viable option for diversification. These trends are: (1) the growth of demand in Central and Northern Europe, (2) the absence of any other real candidate to balance the growth of gas supplies from Russia and (3) the search for the lowest-cost route for handling the important volumes needed for enhanced competition in keeping with the goals of the Energy Union. The route crosses the Black Sea.
- Growth of demand in Central and Northern Europe.The most important new market for gas from the Southern Gas Corridor gas is emerging in Central and Northern Europe. Imports of liquefied natural gas (LNG) have a significant potential for increasing EU-wide energy security. However, some EU Member States in Central and Northern Europe judge that there are significant economic and environmental advantages for pipeline supplies from Russia and Turkmenistan over LNG in the medium and long terms.
- Absence of other suppliers. Other supply sources of natural gas by pipeline are of lesser scale. They are hence unable to have any significant impact on prices at the EU level. Also they are potentially more expensive. Supplies from Turkmenistan will be valuable not only for enhancing market competition in Central and Northern Europe. They will also they have the real possibility to contribute significantly to diversification on the EU scale.
- Lowest-cost route. All comparative studies conducted concerning either condensed or liquefied natural gas vs. the White Stream project have been favourable to White Stream. The cost of the complementary TCP has plummeted by two-thirds of the original estimate.