Iran and Turkmenistan have a lot of room for expanding partnership in the hydrocarbon sector. Additionally, the importing Turkmen gas could aid Iran in achieving its strategic ambition of turning into a regional energy hub, a recent study by the Research Center at the Iranian Parliament found.
In light of Turkmenistan’s strive to expand its gas export routes, Iran will be the most lucrative market for Turkmen gas. Moreover, as a prerequisite for Iran to achieve the goals of its macro-strategy to become a regional energy center, the country must also employ a maximum amount of gas imports from Turkmenistan, says the report entitled “Considerations and Strategic Requirements in Energy Trade between Turkmenistan and Iran.”
The authors of the report highlighted several arguments in favor of the expediency and economic profitability of the sale of Turkmen gas in the Iranian direction.
Firstly, due to the proximity of the gas transmission distance, gas export to Iran is the most profitable export option for Turkmenistan from an economic point of view.
Secondly, since Turkmenistan follows the policy of selling gas at the border, Iran will be the most desirable export destination for Turkmenistan.
Finally, Turkmen gas can reach other markets through Iran – Turkey, India, Pakistan and Iraq, without the need for expensive alternative routes.
The study identifies four crucial sectors that hold the greatest promise for the growth of the Turkmen-Iranian gas-energy cooperation:
1) Maximum gas imports from Turkmenistan. “One of the requirements of the strategy of turning Iran into a regional energy hub is the import of gas from the countries of the region. In the meantime, considering the huge gas reserves in Turkmenistan and low cost of gas delivery due to the short distance of transmission, importing gas from this country is of strategic importance”, the paper emphasizes.
“In the mid-term, the import capacity of 15-20 billion cu m is available for Iran, which means using the maximum capacity of the two existing pipelines linking two countries”, Iranian experts note.
However, in the long-term perspective, the authors recommend their country not only to import Turkmen gas, but also to engage in the development of hydrocarbon deposits on the territory of Turkmenistan. Furthermore, the transit of Russian gas to Iran through Turkmenistan along with the development of pipeline infrastructure appears promising.
2) Transit and swap-supplies of oil and petrochemical products. Iran may offer Turkmenistan its territory for transit and swap supplies of petroleum products.
Experts propose to solve this task by using the transit and transport route Serakhs – Chabahar port, stretching from north to south.
3) Creation of a bilateral settlement center. “The creation of a joint settlement center for the development of bilateral trade can provide a secure channel for financial settlements in the context of banking restrictions. The use of such a system will reduce the cost of mutual trade,” analysts believe.
4) Export of technical and engineering services from Iran. The report underscores Turkmenistan’s economy’s steady growth due to the country’s abundant oil and gas resources, as well as ongoing implementation of major projects, including in the petrochemical industry.
In this context, the export of technical and engineering services from Iran to Turkmenistan may become one of the areas of trade cooperation between the two countries, the research paper says.
The report contains a number of statistical data on the upstream sector of Turkmenistan:
Turkmenistan has huge gas reserves among the Central Asian countries and has established extensive gas exports. The country’s resources are estimated at 13.6 trillion cubic meters or 7.2% of the world’s conventional reserves.
According to international data, 12 years ago, in 2010, Turkmenistan produced 40.1 billion cu m of gas, production increased to 66 billion cu m in 2020. In 2021 the output has soared and reached 79.3 billion cu m, including exports – 42.1 billion cu m, analysts say.
The gas consumption in the country increased by 71% over the ten-year period 2010-2020. The boom was brought on by the growth of the petrochemical sector and the expansion of natural gas utilization in the electric power sector.
According to forecasts, gas production in Turkmenistan will increase to 89 billion cu m in 2030 and consumption will equal to 51 billion cu m. The remaining 47 billion cu m of Turkmen gas will make up the excess export capacity.
In November 2021, Iran, Turkmenistan and Azerbaijan signed a swap supply deal. According to the scheme, from January 2022 Turkmenistan supplies 5-6 million cubic meters of gas to Iran every day, and Iran sends equivalent volumes to Azerbaijan.
Iran is obliged by the deal to swap 1.5 -2 billion cubic meters of Turkmen gas per year.
In June of this year, Iranian Oil Minister Javad Owji announced that agreements had been reached between the three countries on doubling the volume of gas exchange.
The Research Center under the Iranian Parliament was established in 1992 as a body that carries out expert evaluation of normative acts, provides academic and research support for lawmaking, as well as aims at applying efficiently research inputs in the legislative process.///nCa, 20 September 2022