Turkmenistan's Route To The European Union

Turkmenistan has gotten involved in a trade project whose proponents are promising quick revenue and bigger returns further in the future.

The country's economy has been in bad shape for the last four years, so it could be an example of "any port in a storm," which seems an apt way of looking at this case.

At a March 4 meeting in Bucharest, the foreign ministers of Azerbaijan, Georgia, Romania, and Turkmenistan established a Black Sea- Caspian Sea (BSCS) International Transport Corridor, a new trade route running between Turkmenistan's Caspian Sea port at Turkmenbashi City and Constanta on Romania's Black Sea coast.

It might not ever become a major global trade route. But the most important aspect for the Central Asian country is arguably that the BSCS is a trade route that already exists, though infrastructure will need to be developed for the BSCS to reach its potential.

The Georgian Foreign Ministry's press service released a statement the day of the Bucharest meeting that said, "Europe's connection with Central Asia through the two seas (Black and Caspian) is the shortest and most economically feasible route among currently existing transport networks."

True enough, at least in theory. And that would be a major boost for the port at Turkmenbashi City, which was recently renovated and remodeled at an estimated cost of some $1.5 billion.

The aim of the modernization was to take advantage of an expected increase in trans-Caspian trade. The BSCS route extends this, linking Turkmenistan to Romania and thereby to the European Union as well.

There are a few obstacles.

The first is that Azerbaijan's new port at Alat, which is replacing an older port at Baku, is not fully operational. Alat is expected to become the key port on the western Caspian coast, where sea cargo is put on rails for the journey through the Caucasus Mountains to ports on Georgia's Black Sea coast.

Even once Alat is completed, Turkmenistan will be competing to ship its goods -- and possibly those of countries further east as part of China's Belt and Road Initiative or the Asian Development Bank's Lapis Lazuli corridor -- through a port that also serves sea cargo from Kazakhstan and railway lines in Alat that also connect to Russia and Iran.

Once through the Caucasus, there are five Georgian ports that could handle cargo from Turkmenistan, depending on the goods.

Georgia's deepwater port at Anaklia is still under construction. Once it is completed (and there are nine phases of the project), the port should accommodate some 100 million tons of cargo annually. Work there started in 2017, with the first phase due to be completed in 2021. The Anaklia website says that at that time volumes will be modest -- 1 million 20-foot equivalent units (TEU), the standard shipping containers one sees on ships, trains, and often as trading stalls or shops at bazaars in Inner Asia, and 1.5 million tons of dry bulk.

Turkmenistan exports cement, carpets, wool, textiles, and fertilizer, and that might be the bulk of its exports to the EU in the coming few years.

Turkmenistan would make more money by exporting petroleum products, such as those (petroleum coke, bitumen, ammonia, as well as gasoline) produced at the Turkmenbashi refinery or the new gas-to-liquids plant at Ovadan-Depe.

Azerbaijan's port at Alat does have a RORO (Roll-on/roll-off) terminal that opened in January 2018, so Turkmenistan could load the petroleum products on railway tanker wagons, load those onto ships, and send the cargo west.

However, there are only two Georgian Black Sea ports that handle liquid cargo. As mentioned in an earlier Qishloq Ovozi, those are the port at Batumi, which is managed by Kazakhstan's state-owned KazTransOil, and the port at Kulevi, which is operated by the State Oil Company of Azerbaijan Republic (SOCAR). Kazakhstan and Azerbaijan are competing for the same Western petroleum and petrochemical markets that Turkmenistan is targeting.

The trade potential of the BSCS might be modest for Turkmenistan in the near term. It is not clear, for example, what Turkmenistan might import from the EU or the Caucasus countries. But, given Turkmenistan's current dire economic situation, any new market for any Turkmen exports would be welcome.

The BSCS's immediate advantage to Turkmenistan is that it helps expand Ashgabat's dialogue with the European Union. (That Romania currently holds the rotating presidency of the EU could prove beneficial, as well.) About the same time that Turkmenistan's foreign minister was in Bucharest discussing the BSCS project, the Turkmen Foreign Ministry was hosting the head of the EU delegation to Turkmenistan, Christian Berger, to discuss opening an EU office in Turkmenistan.

Turkmenistan will require considerable EU support if it is ever to realize one of its grandest projects: the Trans-Caspian Pipeline (TCP).

For more than 20 years, Turkmenistan has hoped to export some 30 billion cubic meters of its natural gas annually to the EU.

The lack of a clear legal status for the Caspian Sea has hindered progress on that project, but the signing of the Caspian Sea Legal Convention in Aktau, Kazakhstan, in August 2018 cleared up many points.

Turkmen and EU representatives have met several times in recent months to discuss the TCP.

Meanwhile, Turkmen-EU cooperation on the BSCS could help lay the foundations of Turkmen-EU cooperation on the TCP.