After nearly three decades of negotiations, Turkmenistan and Türkiye have finally struck a historic natural gas deal, one that could eventually reshape the energy geopolitics of the Caspian region and beyond.  The agreement, although for small volumes, was reached after 27 years of interest and negotiation and will diversify both Türkiye’s natural gas imports and Turkmenistan’s export markets.  The timing of this long-awaited deal is significant, as both countries depend heavily on natural gas trade and urgently need diversification.  The key question is whether these relatively limited volumes of gas can build relationships that could lead to larger volumes in the future?

On February 11, Türkiye’s energy minister Alparslan Bayraktar stated that Türkiye’s state-owned pipeline operator BOTAŞ and Turkmenistan’s Turkmengaz reached a deal on the transportation of natural gas from Turkmenistan to Türkiye.  According to the treaty, Ankara could buy up to 2 bcm natural gas per year.  The deal plans to begin the gas flow on March 1.

Turkmenistan has the fourth-largest proven natural gas reserves in the world, and the export of natural gas constitutes the vast majority of state revenue.  China remains the main purchaser of Turkmenistan’s gas, with China the destination for more than 70% of all Turkmen gas exports.  In 2023, $9.6 billion out of a total of $14.17 billion in Ashgabat’s gas revenues came from sales to China.  Turkmenistan, therefore, is faced with the risk of dependency on Chinese buyers.  While 2024 export data have yet to be released, a five percent growth estimate suggests that China’s gas imports could account for as much as 64% of Turkmenistan’s total exports.  

In contrast,  without reserves of its own, Türkiye needs continuous imports of natural gas to sustain its economy.  Ankara, too, has issues of dependencies, relying primarily on Moscow as its primary gas supplier.  In 2023, about 45% of Türkiye’s natural gas imports came from Russia.  This overreliance has exposed Türkiye to geopolitical risks, as seen in 2015 when tensions with Russia over Syria nearly derailed the TurkStream pipeline project, after Turkish forces downed a Russian fighter jet.

Gurbanguly Berdimuhammedov, the former president and still dominant figure in Turkmenistani politics, welcomed the recent Turkish deal during a phone call with Iran’s President Masoud Pezeshkian.  Turkmenistan’s media have indicated that the transfer of natural gas will be achieved through a gas swap with Iran. The swap implies that Iran will receive the gas from the Turkmenistani border and release its own gas from regions through pipelines going to Türkiye, such as the Tabriz-Ankara pipeline.

Many have long discussed building an undersea Trans-Caspian gas pipeline from Turkmenistan to Azerbaijan which would offer the promise of higher gas transit volumes and revenues for Ashgabat. Despite the ease of using existing Iranian infrastructure, even for smaller volumes, Türkiye has shown interest in the pipeline in the long term.  Last year, Turkmenistan and Iran signed a contract for the annual delivery of 10 bcm of Turkmenistani natural gas to Iraq.  The contract included another swap agreement aiming to transport the gas to Iraq via Iran. However, the operational feasibility of the Iraqi-Iranian gas trade remains problematic. Recently, Iraqi Prime Minister Mohammed Al-Sudani announced that Iraq intends to cease importing gas from Iran by 2028, citing ongoing supply disruptions. Tehran’s supply disruptions might persist as the Turkmen-Turkish deal’s gas flow approaches.

Nevertheless, the recent deal with Türkiye is timely, addressing the structural economic vulnerabilities of both Ashkabat and Ankara.  Even though the scale of the deal is small compared to the 10 bcm transfer to Iraq or about 35 bcm to China, it establishes a precedent and is open to increases.  With Turkmenistan having moved to provide Europe with gas, the deal could conceivably set the stage for a broader EU-Turkmenistan deal.  Though modest in scale, this Turkish deal sets a strategic precedent, potentially reshaping energy flows from Central Asia to Europe in the future.