Diplomatic relations between Turkmenistan and Iran started with Turkmenistan’s independence in 1991 and Iran was one of the first countries who recognized the sovereignty of Turkmenistan. From this date on, an intense relationship has started to be established between the two countries in the fields of energy, infrastructure and economy. Iran and Turkmenistan are the world’s second (32 trillion cubic meters) and fourth largest (19.5 trillion cubic meters) proven natural gas holding countries, respectively, according to the British Petroleum (BP) Statistical Review [BP Statistical Review, 2019]. The fact that Turkmenistan and Iran share a common border exceeding 1,000 kilometer (km) in length and confessional closeness increases the possibility of more comprehensive cooperation between the two countries compared to other Central Asian countries.
First of all, almost all of Iran’s sectors, including the energy sector, has been under the sanctions of the West, especially the United States of America (USA), for years due to the country’s nuclear program. Iran, which cannot fully use its energy capacity due to the sanctions, also has a weak infrastructure in the energy sector. In addition there are serious problems with the country’s pipeline infrastructure, especially in the north due to mismanaged and underutilized gas fields, investment gaps and the high cost of subsidies on the economy. That’s why although Iran is the second in the world in terms of proven natural gas reserves; it imports natural gas from Turkmenistan for meeting the natural gas needs of the northern and northeastern parts of the country due to its geographical location, which is less costly than laying a pipeline from the south to the north. In this context, the importance of energy cooperation between the two countries is indisputable for Turkmenistan, which wants to diversify its energy policy, and Iran, which wants to meet the energy needs of the northern region.
The Turkmenistan-Iran natural gas agreement, signed in July 1995 between the President of Turkmenistan, Saparmurat Niyazov and the President of Iran, Ali Ekber Hashemi Rafsanjani, was ratified in January 1996 [Atai&Azizi, 2012]. The natural gas transportation to Iran is realized through the 200 km Korpeje-Kurtkuyu pipeline with an annual capacity of 8 billion cubic meters (bcm), built in 1997 and 182 km Dauletabad-Sarakhs-Khangiran pipeline with an annual capacity of 12,5 bcm, built in 2010 [Begenjov, 2018]. The Korpeje-Kurtkuyu pipeline transports natural gas from the Korpeje field in western Turkmenistan to the Kurtkuyu region in northern Iran. Although the pipeline’s capacity is not very large, it is of historical importance as it carries the post-Soviet Caspian Sea natural gas to its first export route, without participation of Russia.
Due to the small total capacity of the constructed pipeline and the lack of investment in the Korpeje gas field, Turkmenistan could not provide the natural gas volume demanded by Iran annually. To overcome the supply shortage and increasing mutual energy cooperation, it was decided to construct the new pipeline. The Dauletabad-Sarakhs-Khangiran gas pipeline, opened in 2010 for increasing energy cooperation between the two countries, is designed to transport natural gas from Turkmenistan’s Dauletabad field to the north of Iran. This natural gas pipeline is planned to meet the gas needs of the provinces of Semnan, Mazandaran, Golestan, Khorasan-Rezavi, North Khorasan and South Khorasan in the northeast of Iran. Thus, Turkmenistan’s capacity to transport natural gas to Iran through two pipelines has reached 20 billion cubic meters per year. With Russia halting gas imports from Turkmenistan in April 2009 [Kanapiyanova, 2021], it was a good time for a new export route to stimulate the Turkmen economy based on energy income.
However, it is possible to say that Turkmenistan’s policy of developing energy cooperation with Iran is full of ups and downs. Due to the problems arising from the economic sanctions imposed on Iran, the Tehran administration could not pay for the natural gas imported from Turkmenistan, and therefore, there were problems between the two countries regarding the payment. In response to this, the Ashgabat administration, by applying pressure to Tehran, stopped natural gas exports to Iran in December 2008 and continued this policy until February 2009, increasing the natural gas price by two times [Begjanov, 2021]. By 2010, the price problem between the two countries was resolved with the start of the second pipeline. In November 2012, the natural gas flow exported from Turkmenistan to Iran decreased as a part of the USA pressure on Turkmenistan or the sanctions policy of the West against Iran at that time, and the Tehran administration criticized Ashgabat for this reason. Iran, which started to experience disruptions in gas flow, has started to implement some projects to reduce the need for Turkmen natural gas. For this purpose, Iran started the construction of a 160 km long pipeline, which would extend from Semnan province to Mazandaran province on its territory despite the very high cost in November 2012 [Ismaylov&Budak, 2014].
The natural gas crisis between the two countries broke out again in 2017. In a statement on January 1, 2017, the National Iranian Gas Company announced that Turkmenistan had stopped natural gas exports to Iran due to Tehran’s 2 billion dollars debt for gas received in 2007-2008. The Iranian side, on the other hand, argued that the debt mentioned by Turkmenistan is more than the reality [Pannier, 2021]. Despite long negotiations, the parties could not come to an agreement and the state company “Türkmengaz” took the issue to the International Court of Arbitration (ICA). Last year, the ICA announced its decision on the Iran-Turkmen natural gas dispute in favor of Turkmenistan reality [Annayev, 2020].
President of Turkmenistan Gurbanguly Berdimuhamedov and President of Iran Ebrahim Raisi came together on the sidelines of the Shanghai Cooperation Organization Heads of State Council meeting held in Tajikistan’s capital Dushanbe on September 17th 2021 and agreed to solve the gas problem [Orient.tm, 2021]. In addition, Foreign Minister of Turkmenistan Rashid Meredov visited Iran on 26-28 October 2021 for a meeting of the foreign ministers from the countries bordering Afghanistan plus Russia and had the opportunity to discuss a very crucial bilateral issue, Turkmen’s gas flow to Iran with Iranian officials. After the meeting Iranian side announced that Tehran is interested in resuming the imports from Dushanbe [Pannier, 2021].
It is a fact that the gas cut between the two countries is completely debt-based, and it is certain that the Turkmen gas flow, which was stopped 5 years ago, will resume once the debt problem is resolved. Based on the developments regarding the meeting of the leaders of the two countries to negotiate the issue, it is possible to say that the energy crisis between the two countries, which has been going on since 2017, will be resolved in the near future. Since the disagreements in the energy agreements between the countries are mostly about payments and price bargaining, it has never had a negative effect on bilateral relations and has always been able to find a solution. In any case, price disputes are often limited to negotiations or disagreements between two national gas or oil companies, rather than being a cross-country issue. Therefore, it is expected that the necessary energy cooperation between the two countries for both parties will continue and be further developed.
References
Annayev D. (2020). Iran Attempts to Spin Major Ruling on Gas Payments to Turkmenistan. Retrieved from https://central.asia-news.com/en_GB/articles/cnmi_ca/features/2020/07/07/feature-01. Accessed on 31.10.2021.
Atai F., Azizi H. (2012). The Energy Factor in Iran-Turkmenistan Relations. Iranian Studies. Vol.45. No. 6. pp.745-758.
Begenjov B. (2018). Turkmenistan’s Energy Policy. Master’s Thesis. Istanbul: Istanbul University.
Begjanov A. (2021). Turkmenistan’s Energy Exportation Deals with Iran. International Academic Journal. Vol.5. No. 1. pp. 69-80.
BP.com (2019). BP Statistical Review. Retrieved from https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2020-full-report.pdf. Accessed on 09.09.2021.
Ismaylov E., Budak T. (2014). Turkmenistan’s Energy Policy in the Post-Independence Period. Bilgi Strateji. Vol.6. No. 11. pp. 29-49.
Kanapiyanova Z. (2021). Bringing Turkmen Gas to the European Market: Trans-Caspian Gas Pipeline. Eurasian Research Institute. E-bullettin. No: 323.
Orient.tm (2021). Iran Hopes to Purchase Turkmen Gas to Prevent Energy Shortages in Winter. Retrieved from https://orient.tm/en/post/34888/iran-hopes-purchase-turkmen-gas-prevent-energy-shortages-winter. Accessed on 30.10.2021.
Pannier B. (2021). Turkmen-Iranian Relations Warm Ahead of Winter. Retrieved from https://www.rferl.org/a/turkmenistan-iran-gas-deal/31537314.html. Accessed on 31.10.2021.
Note: The views expressed in this blog are the author’s own and do not necessarily reflect the Institute’s editorial policy.