Senator Steve Daines raised more than a few eyebrows at a Senate Foreign Relations Committee hearing with Marco Rubio on 20 May when he lauded the potential benefits of a gas pipeline interconnector across the Caspian Sea between Turkmenistan and Azerbaijan. 

A Trans-Caspian pipeline (TCP) to bring gas from Turkmenistan (world’s fourth or fifth largest reserves, depending on which statistics you prefer) to Europe is an idea that has been kicking around for at least 25 years. But it has gone nowhere, largely due to Turkmenistan’s indifference and Russia’s opposition, and in recent years practical action has focused, instead, on limited gas swaps via Iran.

But could the time now be right for a revival of the TCP proposal? After all, the main Russian gas pipeline to Europe via Ukraine has been shut down, and the EU is committed to ending all gas imports from Russia – whether via pipeline or by liquified natural gas (LNG)  - by the end of 2027.

Needless to say, the issue is more complicated than simply addressing the supply side by building an interconnector between the existing Turkmen and Azerbaijani offshore gas pipeline networks. First, an interconnector would not be capable of delivering the full potential of Turkmen gas exports, for which a new pipeline would be needed. But as a political and economic proof of concept, it would be a start.

Second, the route to Europe and the demand side would also need to be fixed. The Southern Gas Corridor (SGC) from Azerbaijan to Italy, comprising the South Caucasus Pipeline, the TransAnatolia Pipeline (TANAP), and the TransAdriatic Pipeline (TAP), is already pretty much full. In 2024, Azerbaijan exported 25.2 bcm (2.4 bcm to Georgia, 9.9 bcm to Türkiye, and 12.9 bcm to Europe), including to additional countries in Central and Southeast Europe suddenly looking for alternatives to Russian supplies. Azerbaijan’s President Ilham Aliyev noted recently that Azerbaijan was now supplying gas to 12 countries, of which eight are EU Member States.

For Azerbaijan and these new customers, the obvious answer to the need to replace Russian gas is to expand the capacity of the SGC. Indeed, the EU and Azerbaijan agreed in 2022 to double exports to the EU by 2027. Even though Azerbaijan believes it could fill the expanded capacity itself from more gas coming onstream from existing fields and displacement from a ramp-up in green energy capacity, the expansion would definitely be essential, if there weres an agreement to carry any meaningful supplies from Turkmenistan.

But the EU is caught in a dilemma. How can it reconcile the demand from some member states for more Azerbaijani gas with the EU’s Green Deal, a commitment to reach net zero by 2050? President Aliyev complained in April about the EU’s hesitancy, noting that it was unwilling to make the long-term commitments that would justify the cost of SGC expansion, and that European financial institutions were reluctant to lend for fossil fuel projects. For the EU, the easier option – even if more expensive in the short to medium term – is to rely on additional liquified natural gas (LNG) imports. Result: deadlock

It’s at this point that the geopolitics becomes interesting. Unsurprisingly, Türkiye is a critical player. It has recently initiated a gas swap deal with Turkmenistan for the import of 1.3 bcm in 2025, with Turkish Energy Minister Bayraktar noting at the time that – in the medium and long term – a Trans-Caspian pipeline would be a better option in both technical and commercial terms.

For Türkiye, increased volumes from both Azerbaijan and Turkmenistan would both meet growing Turkish demand,, as well as give Türkiye, which is setting itself up as a gas hub, opportunities for arbitrage, to sell the gas onward to European markets at a higher price. Türkiye already stands to benefit from the EU’s plan to stop importing any gas from Russia, with the likelihood that the Russian gas via Turkstream (across the Black Sea to Türkiye and onwards to Europe) will stay in Türkiye, with Ankara selling alternative supplies to the EU. 

All of this points to a possibility that Türkiye and Azerbaijan (together with the pipeline shareholders) will finance SGC expansion themselves, but – maybe – only as far as Türkiye, with Türkiye then providing increased volumes to the EU at its own risk. While clearly not ideal for Azerbaijan that would have to accept a lower price, it might be the only solution to cut through the deadlock.  Expansion could stand alone on the back of increased Azerbaijani gas volumes. But could the prize of large Turkmen gas volumes be back on the table too?

Observers in Baku note that Russia, which has long opposed competition from Turkmenistan for Russian gas supplies to Europe, is having to look for new markets in the face of the EU’s plan to stop any Russian gas imports by 2027. China is an obvious destination for Russian exports, although the Chinese drive a very hard deal. And so, as part of their negotiating tactics, it is possible that Russia would now prefer Turkmenistan’s exports to switch from China (around 80% of Turkmenistan’s total gas exports) to Europe, leaving the Chinese market open for Russia. 

This is, of course, speculative.  But with Turkmenistan’s elder Berdymukhamedov due to visit Azerbaijan shortly, there is the possibility that Senator Daines was very much foreseeing future Caspian developments in his remarks. And Secretary of State Rubio’s response that, “Yes, it’s in the best interests of the United States and its allies that the interconnector should happen,” could potentially herald renewed U.S. engagement in the region and - crucially - with Türkiye , now emerging as the key player.