Why is it that Turkmenistan has been unusually active in recent months trying to find buyers for its natural gas? Close observation suggests that it is a somewhat anxious response to Russia’s search to find new markets to replace lost gas revenues from European Union markets.

In the decades since ex-Soviet Turkmenistan became independent in 1991, the country has been rather passive in marketing and selling its gas. Turkmen officials became known for reminding potential customers that the country boasted trillions of cubic metres (tcm) of gas reserves, but then leaving it up to interested parties to initiate talks and make proposals.

All that has changed in 2024.

Since the start of March, Turkmen officials have been very actively and publicly advertising Turkmenistan as a gas supplier, naming Azerbaijan, Turkey, Afghanistan, Pakistan, India, Kazakhstan and the European Union as possible customers in the process.

Turkmenistan now appears so intent on selling more gas that when chairman of the country’s Halk Maslahaty, or People’s Council, Gurbanguly Berdimuhamedov, visited Tajikistan in early April, he readily offered to sell it volumes. Yet cash-strapped Tajikistan has not even imported 1bn cubic metres (bcm) of gas annually in more than three decades of independence.

Let’s dig deeper. What exactly is underpinning the apparent desperation?

Losing revenues
Turkmenistan is faced with losing nearly half of its current natural gas sales revenues—and those sales account for more than 80% of state revenues.

Endowed with the world’s fourth or fifth largest gas reserves (estimates range from 18 to 27 tcm), Turkmenistan’s potential as a gas supplier is well known. However, landlocked Turkmenistan’s terms for exporting its gas have essentially been, “You build a pipeline to the Turkmen border, and we’ll hook you up to our gas.”

Yet in more than 30 years of Turkmenistan’s post-Soviet existence, the only pipelines built for Turkmen gas flows are two that connect to Iran (combined capacity 20 bcm) and three that run to China (combined capacity 55 bcm).

For landlocked Turkmenistan, the infrastructure that would give it enough gas export market flexibility is just not there (Credit: IRNA).

In early 2017, Turkmenistan suspended gas exports to northern Iran in an argument over Iranian payment arrears. Nowadays, Turkmenistan only pipes small gas volumes to the Iranians as part of a swap deal, whereby the gas is sent in return for Iran supplying a like amount to its neighbour Azerbaijan, with Azerbaijan then paying Turkmenistan for the gas.

In 2023, Turkmenistan sold 1.5 bcm to Azerbaijan.

Looking back to less than 20 years ago, Turkmenistan was exporting anywhere from 40-50 bcm of gas to Russia annually via the Soviet-era Central Asia-Center five-pipeline network.

At the start of 2009, Turkmenistan looked set to see its gas sales soar. Talks with Russian gas giant Gazprom were held on boosting shipments to Russia to 80-90 bcm annually and a construction project for a fourth pipeline to China, that would potentially lift deliveries to the Chinese market to 85 bcm, was fast advancing.

In April of 2009, amidst a pricing dispute with Russia, a mysterious pipeline explosion halted Turkmen gas exports on Central Asia-Center-4. When the pipeline was repaired in 2010, Moscow stated that it would import no more than 10-12 bcm of Turkmen gas annually.

In February 2015, Gazprom announced that it would reduce yearly imports of Turkmen gas from 10 bcm to 4 bcm, and at the start of 2016, it said it was suspending Turkmen gas imports entirely.

By that time, Turkmenistan was descending into an economic crisis that still lingers today. After Russia cancelled its gas deal, Turkmenistan was left with China as its sole customer. The bilateral long-term gas contract with the Chinese was set out with a fixed price, believed to be $187 per 1,000 cubic metres.

Russia in 2019 finally agreed to resume some imports of Turkmen gas. It signed up for up to 5.5 bcm annually, but at the meagre price of $110 per 1,000 cubic metres.

Also, in late 2022, neighbour Uzbekistan, experiencing winter gas shortages, reached a deal for up to 2 bcm per year.

So for the past 15 years, China has been Turkmenistan’s only major, and at times only, gas customer. From December 2009 to December 2023, Turkmenistan shipped more than 380 bcm to China.

With Lines A and B of the Central Asia-China (CAC) pipeline, (each with 15 bcm of capacity), as well as Line C (25 bcm), all operating in recent years, Turkmenistan has been exporting 35-38 bcm to China annually. Beijing paid Turkmenistan $9.6bn for delivered gas in 2023.

The proposed Line D of the CAC has remained a "pipe dream" (Credit: etemadonline.com).

As for the fourth CAC pipeline, namely Line D (30 bcm) —to take a route through Uzbekistan, Tajikistan and Kyrgyzstan to China's western Xinjiang province—there has been almost no construction progress in nearly 10 years.

New gas race
When Russia launched its full-scale war on Ukraine in February 2022, it lost its primary gas customer, the EU.

Prior to 2022, the EU was purchasing as much as 150-160 bcm of Russian gas annually, paying top prices (nearly $2,000 per 1,000 cubic metres in November 2021). By the end of 2023, Russian pipeline gas exports to the EU were down by 80%.

Russia looked east to help offset the loss in gas revenues from Europe and quickly found buyers in Central Asia. Kazakhstan and Uzbekistan have both experienced severe power shortages in recent winters caused, in part, by a lack of domestically-produced natural gas.

In 2023, Russia struck deals to export gas to both of these countries. By the year’s end, it supplied 7.25 bcm to Kazakhstan and 1.22 bcm to Uzbekistan.

In March of this year, Uzbekistan agreed to start importing up to 11 bcm of Russian gas annually by 2026.

Somehow, Turkmenistan had missed out on an opportunity to sell nearly 20 bcm of gas to its immediate neighbours, and there is the question of what Russia does with the Turkmen gas it buys.

Since Russia does not need the 5.5 bcm of Turkmen gas it purchases, where does this gas go?

Turkmen gas, as noted, flows to Russia via the Central Asia-Center system, the same network Russia has earmarked for gas deliveries to Uzbekistan. That raises the question of whether some of the “Russian” gas Uzbekistan is buying is originally Turkmen gas.

There might be worse to come for Turkmenistan.

The three Turkmenistan-to-China pipelines traverse Uzbek and Kazakh territory, with both Kazakhstan and Uzbekistan allocated 10 bcm of capacity across the pipelines for their own gas exports. Therefore, since the Uzbeks and Kazakhs now need their domestically-produced gas for their own consumption, the 20 bcm of capacity has become available.

Kazakhstan’s Ambassador to Russia, Dauren Abayev, gave a wide-ranging interview to Russia’s TASS news agency ahead of the May 9 Victory Day celebrations.

Asked about the transit of Russian gas to China via Kazakhstan, Abayev responded that a “road map” was already agreed, adding: “We are talking about 35 billion cubic metres of gas that will be supplied to China.”

The only gas pipelines in Kazakhstan leading to China are Lines A, B, and C of the CAC network. Let’s remind ourselves: the lines have a total capacity of 55 bcm, of which around 35 bcm is currently used by Turkmenistan.

The Russian moves could explain Turkmenistan’s recent unprecedented marketing blitz to sell its gas.

There have been frequent meetings, in various combinations of Turkmen, Turkish, Azerbaijani and EU officials on the possibilities for shipping Turkmen gas to Europe for more than two years. And just this week Pakistani officials talked of piping Turkmen gas to the Arabian Sea coast for shipping to European markets.

There are several agreements in the right direction and many good intentions but, so far, no physical infrastructure for bringing Turkmen gas westwards.

Turkmenistan could find itself in a very precarious situation, very soon.