Azerbaijan and Turkmenistan as Energy Suppliers: Geopolitical Importance and Impact on EU-Russia
Mis à jour : mars 31
Written by Adrien Mauclet
For decades now, the question of energy supply and particularly gas has been at the center of geopolitical issues. Some states such as Russia and Turkmenistan have large gas reserves. But not all regions of the world do, including Western Europe. While sourcing is of paramount importance to Western countries, it should not be forgotten that exports are equally important to suppliers. In this article, I will first briefly analyse the geopolitical issue of energy relations, before looking at Azerbaijan and Turkmenistan as well as the challenges they represent. Finally, I will analyse the extent to which relations between the European Union and these countries impact or could impact Russian exports, before concluding with some possible available policies for the EU in order to pursue its energy relations.
1. Geopolitical understanding
First of all, it is important to make the term geopolitics unambiguous. Following Cadier, it is difficult to define geopolitics and it needs to be contextualized. Even if disputed, he gives three characteristics: the actor considers deterring hard power; the concerns are linked to a question of territoriality; other powers are taken into account. (Cadier, 2018). Concerning energy, the geopolitical game is between, on the one hand, the States supplying the energy, and on the other, the States demanding energy in order to get a stable and secured access to these energy resources. According to these characteristics, the question of energy supplies of Azerbaijan and Turkmenistan raises geopolitical concerns, both for Russia and the European Union.
Before last year and the construction of the new Trans Adriatic Pipeline (TAP), most of the Azerbaijani gas exports were imported by Turkey. But since November 2020, the European Union can rely on the natural gas coming from Azerbaijan, thanks to the TAP. This pipeline completed the South Gas Corridor (hereinafter “SGC”), enabling the EU to capture Azerbaijani gas which goes through Turkey, the Adriatic Sea, Greece and Albania.
Azerbaijan is also included in the EaP (Eastern partnership), a part of the EU’s Neighbourhood Policy. In the communication of March 2020, the European Parliament clearly targeted Azerbaijan as a close partner. (Petrova and Delcour, 2020). In this regard, the EU wants to enhance its connectivity with this country. Since the EU is the first trading block for Azerbaijan, cooperation with the western side of Europe will be vitally important in the upcoming years. Moreover, the communication also highlights the importance of the new SGC which will enhance connectivity. The EU insists on its major role in the region in order to ensure its energy efficiency. (JOIN(2020) 7 final).
However, the international community, and especially the EU, needs to stay cautious. If the Shah Deniz consortium allows the EU to diversify its energy relations, some points limiting Azerbaijan’s geopolitical importance as energy supplier need to be kept in mind.
First, Azerbaijani gas reserves are limited to about 1,2 trillion cubic meters. In the long term, that amount is not enough to keep the SGC viable, from an economic point of view. (Guliyev, 2019). This weakens Azerbaijan’s position on the global energy scale. A solution could be to transit gas from Turkmenistan, but this option has its limits as will be explained below.
Secondly, the decreased interests of companies like Statoil or Petronas in oil-related projects in the Shah Deniz were yet another concern for the region. In this regard, the country had to borrow substantial financial resources to foreign leaders in order to construct pipelines and infrastructures. These decisions may be difficult to understand for some, making Azerbaijan more dependent on its exports of limited fossil energies and increasing its debts towards foreign countries. (Guliyev, 2019).
Regarding the Turkmen case, a first element that should not be overlooked is the geographical aspect. Azerbaijan and Turkmenistan are not precisely situated in the same region. The former is part of the South Caucasus, the latter is in the so-called Central Asian states. As Achgabat is much farther removed from Brussels than Baku, influences are inherently more limited.
Turkmenistan is one of the largest gas reserves in the region, which is estimated around 50,4 trillion cubic meters. It is therefore considered as a “petrostate”[CT1] , relying almost exclusively on its natural resources’ incomes. (Guliyev, 2019).
The country carries out most of its trade with China (around 44% in 2018). After having cooperated with Russia for a while, Turkmenistan has now decided to tighten its energetic links with Beijing. In the meantime, the Chinese authorities invest a lot in developing the Turkmen gas fields and pipelines. This limits the revenues Turkmen authorities can accrue from these exports, since it has an important outstanding debt towards the Chinese government for all the developments and loans. [CT2] (Guliyev, 2019). In this regard, please have a close look at the article written by Timothée Ceurremans “The Legacy of Colonialism: An Unbounded Series”.
However, the recent construction of the Turkmenistan – Azerbaijan – Pakistan – India (TAPI) pipeline could reasonably decrease China’s demand dependency and diversify Turkmenistan’s gas supplies.[CT3] This means that Turkmenistan could be keen to develop gas supply relations with other partners.
4. Geopolitical impacts on EU-Russia energy relationship and caveats
The effects Azerbaijan and Turkmenistan have on the EU-Russia energy relations are important and raise major issues regarding their energy policies.
Firstly, even if Turkmenistan is principally an energy supplier for China, it has a crucial importance for the EU, which could diversify its energy sources. Since Azerbaijan’s natural resources are running out, the construction and operational costs of the SGC will not be recovered without Turkmen gas. For the sole issue of profitability, Turkmenistan is essential for the SGC. (Guliyev, 2019). EU’s trustworthiness on Azerbaijani and Turkmen gas could totally redesign the EU-Russia energy spectrum and relationship. However, the eventual supply from Turkmenistan through a Trans Caspian Project (TCP) to the EU hides some complexities, with Russia’s opposition to the TCP being the main hindrance. Indeed, since EU-Russia energy relations are a two-way dependency, an increase in energy trade between the Caspian region countries and the EU would automatically decrease EU’s gas demand towards Russia. Having no real interest in the project, Russia’s objection to the TCP could be tough, as it has already been the case for the Nabucco pipeline project (ref). Furthermore, Vladimir Putin already shared his opposition towards the project because of environmental purposes (water levels and depletion of biodiversity), claiming it was going against the Teheran Convention on the legal status of the Caspian Sea (Bayramov, 2019). The bottlenecks for the construction of a TCP are numerous and therefore limits its feasibility.
Secondly, the SGC goes through the Turkish territory. Some of the Turkish regions are dangerous since clashes are happening between Kurdish militias on the one side and the Turkish army on the other. As the EU-Turkey relations have deteriorated lately, having Turkey as transit country for European energy may be the cause of some logistical headaches (Siddi, 2019). Moreover, since 2016, President Putin and President Erdogan share close ties. This close relationship could also influence EU’s and Russia’s energy policies and their behavior towards each other.
Third, both EU and Russia are diversifying their energy possibilities. Russia already showed in 2014 throughout the China-directed Power of Siberia pipeline that it could diversify its supply and turn them east-bound. By increasing its gas supply towards the East, Russia may provoke a geopolitical shift and become a less reliable partner for the EU. Furthermore, the EU-Russia dialog being on hold since the Ukrainian conflict of 2014, Russia’s reliability concerning energy-related questions is decreasing. This is why the further development of the SGC could be necessary in the near future, especially for the EU. (Siddi, 2019).
Fourth, even by diversifying its gas demand towards the Caucasus, the EU is probably not going to put an end to its energy-related exchanges with Russia. Indeed, although it was highly disputed, the North Stream 2 pipeline is the proof that Germany wants to increase its gas demand from Gazprom. A lack of consensus on energetic purposes among all the member states opened room for maneuvering to Russia. Nevertheless, the new Biden administration may have an influence on this in the next years with interesting prices for American LNG which could limit the flows going through the North Stream. (Zhiznin and Timokhov, 2019).
5. Which pipeline project should be the EU’s main priority?
Given what was just described it appears that, in order to diversify its demand, the EU should now concentrate on the TCP pipeline project. It could increase the EU’s demand for the SGC, limit Chinese influence in Turkmenistan and decrease the EU’s dependency on Russian gas. However, 3 major concerns (among others) need to be addressed by the EU: by increasing its relations with the SGC, the EU promotes and sustains autocracies; Russia may interfere in this project because it runs counter Putin’s interests and, finally, it does not respect EU’s ecological and carbon-free engagements (in addition to the Caspian Sea pollutions).
The development of the SGC raises issues regarding value-based diplomacy of the EU, as it fails to foster democracy, human rights and the rule of law. By developing its energy relations with the Caspian region, the EU has to deal with Aliyev’s regime, which is known to be authoritarian. If the TCP is set up, the same will apply towards Turkmen President Berdimuhamedow. By increasing its energy demand to these countries, the EU sustains, in a certain way, these autocracies. With the development of the SGC, the EU also takes position, indirectly, in the Nagorno Karabach conflict. The organization’s strong support for human rights could be threatened in this regard. Nevertheless, one could argue that human rights are not respected in today’s main European gas supplier – Russia. The last events with Alexeï Navalny are the irrefutable proof that the EU and Russia have diverging positions about democracy and fundamental rights (Siddi, 2019 and Csaky, 2020).
A second obstacle to this pipeline development is the Russian freezing which is likely to happen (see second paragraph on the section related to the Geopolitical impacts on EU-Russia energy relationship).
A third obstacle is ecologically related. As many experts in the energy field are now pointing out, we are currently going through a so-called “new energy order”, which will probably become predominant in the following years. Exports of oil producers will decrease. This transition implies that Azerbaijan and Turkmenistan will lose of their geopolitical weight towards the EU, but also towards China, Turkmen’s faithful partner. However, this transition is far from being achieved. (Guliyev, 2019).
Throughout this article, we have seen that energy is a powerful geopolitical lever, and that there are many issues surrounding it. The decisions that will have to be taken by the EU on this issue need to be nuanced, as there does not seem to be a perfect solution. While the supply of natural gas from Azerbaijan and Turkmenistan are interesting options, there are a number of issues that require attention. This article was not intended to be an exhaustive list of important issues to watch out for in the implementation of the southern gas corridor, but to illustrate some of them, such as the pressures exerted by the Russian regime and the human rights and environmental issues. In this respect, the environmental impacts of gas consumption remain to be closely monitored as the energy transition becomes more and more urgent.
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