The Caspian Sea is one of the world’s largest and oldest oil and gas producing regions. During the Cold War, the hydrocarbon-rich area was Soviet-controlled as most of the reserves were in the Soviet Union. Since the breakup of the communist state, international companies have flocked to the newly independent countries such as Azerbaijan and Kazakhstan. Of the littoral states, Turkmenistan has by far the largest reserves when it comes to natural gas. Geographic isolation and animosity with Azerbaijan long prevented the export of gas to customers in Europe. Relations between Ashgabat (Turkmenistan) and Baku (Azerbaijan) have improved as the countries signed an agreement to jointly develop a shared natural gas field. While the size of the field isn’t a game-changer, the renewed cooperation between the countries could be. Turkmenistan has the world’s fourth-largest gas reserves at 19.5 trillion cubic meters and 10 percent of the global total. It includes Galkynysh with 2.8 trillion cubic meters which is one of the world’s largest gas fields.
Geographic isolation of Turkmenistan as a landlocked nation is the most important impediment to large-scale exports. That changed somewhat with the ascendance of the Chinese economy and the massive demand for raw materials and energy. Chinese companies imported 43 bcm in 2019 from Turkmenistan which is 80 percent of the total exports that year. While the contracts are kept secret, analysts assume that Ashgabat is still heavily indebted to China for the construction of the Central Asia-China Gas pipeline (CACG). Therefore, Turkmenistan is adamant about diversifying towards Europe. The recent conclusion of the $40 billion Southern Gas Corridor, which consists of the pipelines TANAP and TAP, from Azerbaijan to southern Europe also underlines the opportunity for Turkmenistan. For the first time in decades, the export of natural gas from Central Asia to Europe directly is a viable option if the involved states play their cards well. The European market is already well connected to producers through pipelines and LNG import facilities. Furthermore, gas from Turkmenistan will head to south-eastern Europe where Russia has aggressively built new pipelines to discourage competitors.