Beyond LNG: Viability of the Trans-Caspian Pipeline

President Ilham Aliyev at the opening of the Southern Gas Corridor. Photo from Wikimedia Commons.

In the aftermath of the February 24, 2023 invasion of Ukraine, European countries accelerated plans for energy independence from Russia. European energy independence became the goal, not just to reduce the Kremlin’s war chest, but to ensure Europe’s protection from the possibility of Russian pressure by means of export limits. 

While Europe had diversified its energy by the time of the invasion, the precipitous decrease in energy imports from Russia put an enormous strain on Europe. European governments utilized all possible avenues to address the crisis. They worked to reduce consumption by individuals and corporations and accelerated new green energy projects. Countries like France extended the life of aging nuclear plants, and Germany increased research into new ways to conserve energy. Norway, a major energy exporter, also played a key role in the European strategy. 

Most of all, Europe turned to alternative energy imports, specifically Liquefied Natural Gas (LNG): natural gas compressed to 1/600th the volume and transported by ship. LNG was the perfect emergency solution: by nature, it is extremely adaptable to global demand. As opposed to natural gas transported by pipeline, LNG ships can be rerouted from around the world to meet emergency needs. 

After the sudden need for energy in Europe, shipments from around the world could be redirected to Europe, where energy prices were skyrocketing. The U.S. and Qatar were the major drivers of this increase, though a large amount of gas still comes from Russia. Austria, as a neutral country, continues to import gas from Russia. 

As Europe has struggled to increase production of alternative energy in the year, especially nuclear, there has been a renewed focus on LNG. The U.S. and Qatar are increasing production, and recent construction indicates that they intend to continue increasing their exports to Europe. The U.S. and Europe are building many of the specialized terminals used for compression and decompression, making clear the prominent role of LNG in European energy supply. But LNG, transported on expensive ships with limited capacity, is not a sustainable solution. As long as the government in Moscow remains hostile, European governments will continue to seek energy independence. 

This need has raised the question of whether the long dormant plan for the Trans-Caspian pipeline is viable. The plan involves building a pipeline across the Caspian Sea to connect Turkmenistan to Azerbaijan. The pipeline is the last link necessary to allow cheap and plentiful Turkmen gas to flow through the Southern Gas Corridor into European markets. 

As of now, the logistical and diplomatic challenges are still high, and the need to lay hundreds of miles of pipeline would require a substantial financial commitment for energy imports in the far future. But recent moves by the Turkmen government and Europe's continuing need for energy have brought it into the realm of possibility once more. European leaders have made clear they have no intention of going back to dependence on Russian gas even if the war ends, which makes Europe importing natural gas from the Caspian Sea an easy way to escape Russian energy dependence. 

On the surface, it appears to be an innovative solution to Europe’s energy dependence, but there are many problems with the proposal. A Trans-Caspian pipeline would be far too vulnerable to provide a secure source of gas and could negatively affect the region. 

Building and becoming dependent on the expanded Southern Gas Corridor would support the regime in Turkmenistan. The governments of resource rich countries are generally likely to stay autocratic, since they can rely on a steady income from exports to fund their budgets. Providing these regimes with substantial financial resources seems to be in conflict with European efforts to defend democracy. In addition to financial power, European reliance on this new pipeline would also give the countries along its path diplomatic power, as every state would have the ability to slow or stop the flow of gas. 

From a humanitarian standpoint, reliance on this pipeline is equally concerning as it could cause the European Union (EU) to withhold criticism of regimes that are necessary for its energy supply. 

Adding Turkmen gas to the Southern Gas Corridor also gives more power to Turkey who has been an unreliable partner in recent years. For decades, Ankara has sought to profit from its geopolitical position by playing Russia and the West off of each other; it is likely it will use its newfound influence to do the same. Similarly, Baku is also interested in making money from trade along both axes: West-East with the pipeline and Indian-European trade, and North-South with Iran-Russia. In countering Russia, Azerbaijan could be just as disinterested a partner as Turkey. 

There are also security concerns due to the location of the pipeline. In addition to each of the participating governments having the ability to sabotage the pipeline, it passes under the Caspian Sea. In September 2022, a pro-Ukrainian sabotage team was able to knock out both Nord Stream pipelines in heavily surveilled German waters. It would be an easy target for Iran or Russia, the two largest critics of the pipeline. Gas rights in the Caspian Sea remain a point of tension, and Caspian countries are rapidly increasing their naval capacity, raising the risk of serious conflict. Russia has also used environmental concerns to justify future military action against the pipeline. 

The southern Caucuses are also a high risk region, making the pipeline a poor investment and not a stable and secure source of fuel. The involvement of regional powers like Russia, Turkey, and Iran makes the South Caucasus a likely candidate to be a flashpoint in the coming decade, even without the antagonization of a new pipeline. 

Azerbaijanis are the largest minority group in Iran, making up 16% of the population. Iranian fears of separatist movements have led it to pursue repressive campaigns against its Kurdish minority, and to a lesser extent the Azerbaijanis. This has angered officials in Azerbaijan. Tehran has become increasingly hostile and aggressive, and Baku has responded in kind. Iran’s government has been extremely critical of the proposals and the construction of the pipeline. A serious attempt to transport Turkmen gas to Azerbaijan via ship could aggravate Iran in a region where tensions are already high and conflict seems more likely than ever. 

Iran has also supported Armenia to counter Azerbaijan’s rise, and this is a major point of animosity between the two countries. Should the planned corridor through Iran fall apart and the Azeri government ever try to seize a land route to Turkey through Armenia Iran may feel forced to intervene. Importantly, NATO member Turkey shares ethnic ties with Azerbaijan and provided critical support to Baku during its most recent offensive. Istanbul also responded to Iranian military drills on the border with Azerbaijan by holding its own joint drills with Azerbaijan. Iran is also worried about Israeli aid to Azerbaijan, claiming that Israeli drones are spying on them from Azerbaijan. Whether or not this is true, Israel is a major backer of Azerbaijan, and Iranian fears may be more important than the actual extent of Israeli activity.  

If the Trans-Caspian Pipeline is built, a regional conflict would have a devastating effect on Europe, once again leaving it without energy. A collapsing Iran may strike out against their enemies in Baku, since a likely result of any Iranian collapse would be unrest or secession in their Turkic and Kurdish regions. Tehran could also conceivably use their ability to render the pipeline inoperable to blackmail European states in any future U.S.-Iran crisis. Becoming reliant on Caspian gas seems to be more trouble than it is worth, especially since slowing gas imports from Russia have so far not achieved their goal of altering the Kremlin’s behavior.  

For a green EU, there are also environmental concerns to embracing non-Russian gas. The LNG plants being built in the U.S. to supply Europe in the future have been criticized by activists for their negative effect on local communities and the wider environment. The outbreak of the war also placed enormous strain on global energy markets, as many countries could not afford to keep up with EU spending on energy. The rerouting of LNG shipments from around the world to Europe after demand spiked in 2022 has caused many countries, like China, to return to coal to keep costs down. 

The EU has already increased gas imports from Azerbaijan in the last year, and as the war in Ukraine enters its third year with no end in sight, it is likely that the pipeline will continue to be discussed. But until the region stabilizes, it will never provide the energy security Europe so desperately needs.

Walter Koike-Sieira (GS’25) is a Staff Writer for CPR studying political science. He is interested in Eastern and Central Europe, as well as global security.