This article aims to highlight some of the not very significant facts about the current situation in Trans-Caucasus from the stand point of energy interests of engaged parties.
According to declared plans Russian Gazprom expects to sell 17% less gas to Europe and Turkey in 2020. The company supplies roughly 36% of the aggregate imports of the region.
...company expects its exports, mainly to Europe, to fall to 166.6 billion cubic metres (bcm) in 2020 from around 199.2 bcm last year (according to Chief Financial Officer Alexander Ivannikov)
Azerbaijan is already supplying 6 bcm/year to Turkey/Europe (11.5 bcm total exports in 2019), and plans to increase this by adding 10 more bcm by the end of 2020, in other words 16 bcm in total/year (or 21.5 bcm of total exports).
"BP, one of the shareholders of TAP, said in a statement issued on Tuesday that both the Trans Adriatic Pipeline (TAP) and the interconnecting pipeline built by Italian energy infrastructure company Snam Rete Gas will be commissioned sometime in November.
“(This) will allow the Shah Deniz Consortium to finalize the final steps required to start the twenty-five years long supplies of natural gas from Azerbaijan to customers in Italy, Greece and Bulgaria as planned by the end of 2020,” BP said, according to Reuters.
TAP is the final segment of the three-part Southern Gas Corridor (SGC) mega energy route designed to carry natural gas from Azerbaijan's Shah Deniz offshore field to the markets in Europe. The pipeline measured 878 kilometers in length connects with the Trans Anatolian Pipeline (TANAP), the longest chunk of the SGC, at the Turkish-Greek border. From there it goes onward through overland routes in Greece and Albania and beneath the Adriatic Sea to the final destination in southern Italian village of San Foca.
The overall capacity of TAP is ten billion cubic meters (bcm) of gas per annum, almost two-third of the SGC's annual 16 bcm total capacity and equivalent to the energy consumption of around seven million households in Europe. Turkey is getting the rest 6 bcm via TANAP. TAP is recognized as a strategically and economically important, as well as a reliable access to an all-new energy source for diversifying European energy imports. It assumes a key role in boosting energy security and de-carbonization objectives of Europe. TAP is the first and only pipeline to transport Caspian natural gas to European markets.
If the trend continues as is, fuel-energy products (i.e. oil&gas) exports will account roughly 60% of the exports of Russia, and result in about 180-200 B$ in exports revenues. It is notable that there is about 35% drop in Russia's 'oil&gas' export revenues due to CoVid according to half-2020 statistics.
A simple math suggests that Azerbaijan is going to take up to 10% + market share from Gazprom, providing that it has already signed long term supply agreements with much lower prices than Gazprom charges.
The loss of the exports revenues for Russia due to the Azerbaijan factor could be assessed at around 15-20 B$/annum, if all the plans of the latter are materialized.
Other players, so far watching the game
What about other Central Asian states that also have interest in European/Turkey gas markets?
Russia, effectively controls the transit routes for the gas produced in Central Asia. The main players here are Kazakhstan and Turkmenistan.
Kazakhstan exported 17.7 bcm gas (highest in its history of exports), of which about 35% went to China.
Turkmenistan has signed another agreement with Gazprom in 2019.
In April 2019, after settling its commercial dispute with Turkmenistan, Russia’s Gazprom resumed gas imports (halted in 2016) from this Central Asian state. According to their agreement, Turkmenistan will export 5.5 billion cubic meters of gas per year to Russia by 2024 (Kommersant, July 4)
For both, the exports routs are of critical importance and the countries have been working on number of project with the aim to create alternatives to Russia's monopoly over the transit. Trans Caspian Pipeline, initiated since 1990, is considered as such.
Since having been conceived in the 1990s, the Trans-Caspian Pipeline has occasionally received political support from outside actors. This past spring (2019), US President Donald Trump, in a letter to his Turkmenistani counterpart, Gurbanguly Berdimuhamedov, expressed hope that Turkmenistan “will be able to take advantage of the new opportunities for exporting gas to the West [after the] determination of the legal status of the Caspian Sea” (Turkmenistan.gov.tm, March 24). And the new US ambassador to Ashgabat, Matthew Klimow, resolved during his testimony before the US Senate “[to] make every effort to promote [the] diversification of Turkmenistan’s gas export markets—across the Caspian Sea” (Foreign.senate.gov, May 16). Trump sent another letter to Azerbaijani President Ilham Aliyev emphasizing that “Azerbaijan can play an even greater leadership role [in world energy markets] by partnering with” Turkmenistan and Eastern Mediterranean countries (President.az, May 29). The US, however, is currently focused mainly on supporting the realization of the Eastern Mediterranean gas pipeline from Israel to Europe (State.gov, August 7), which could potentially eclipse the priority of the TCP.
From the European Union’s side, the TCP also received a positive response. The EU Special Representative for Central Asia, Peter Burian, declared that the EU resumed negotiations with Turkmenistan on “the construction of a gas pipeline through the Caspian” to import gas from Turkmenistan (Vestifinance.ru, August 12). This statement was followed by news that German, French and Chinese companies met with senior officials in Turkmenistan to discuss investment and construction issues for the TCP (Orient.tm, August 13).
Moreover, the conclusions adopted by the EU Council of Ministers on the European bloc’s Central Asia Strategy in 2017 and 2019 affirmed Europe’s determination “to extend the Southern Gas Corridor (SGC) to Central Asia” and support the implementation of joint energy projects to bridge “the Black and Caspian Seas” (Consilium.europa.eu, June 19, 2017 and June 17, 2019). The European People’s Party, after winning the most recent elections in the European Parliament, issued its “Position Paper,” in which it named the SGC, including the TCP, projects of “strategic interest” for the EU’s energy diversification (Eppgroup.eu, accessed on September 15).
So far, the position of other two Caspian states Russia and Iran* has been negative as far as the TCP construction goes. Both countries insist on studying the potential environmental damage that the pipeline may cause to the Caspian sea prior to giving consent for its construction.
As the map above shows, the planned capacity of TCP is 30 bcm/year.
Turkey continuously strengthens its geo-political position with the help of its allies, especially USA's blessing and huge support, assuming the role of the gateway for all the pipelines, and significant energy related projects trying to enter Europe and middle East markets from the mainland. The role of the 'bad' guy suits the game it is currently playing, helping other interests look as 'good' guys, and aggressively advancing the interests of the all.
Looks like USA has "successfully" completed, or is about to complete 'second' part of its geo-political strategy expressed by Bill Clinton in 1997, when the latter declared China and Trans-Caucasus as the centers of its foreign interest. Placing its cards on Turkey, its NATO ally, and giving it all the needed resources and support to act, has so far proved as working.
H. Clinton, on the other hand, in her November-December 2020 article (yes, you are not mistaken, she published what she would be perhaps inisting soon) voiced the plan, perhaps for the 'winning' democrat candidate in the upcoming US Presidential elections:
"The country is dangerously unprepared for a range of threats, not just future pandemics but also an escalating climate crisis and multidimensional challenges from China and Russia."
P.S. Meanwhile, the largest oil and gas importing country, USA, in the past 20 years has become one of the major exporters and players in the global market.
* - Iran, though not addressed in this short writing, is so far been kept from playing big in this game. It, nevertheless, may return to the game once sanctions are lifted and the region starts enjoying greater stability. Same could be said about Iraq, the full return of which may change the game completely.