Turkmenistan has the potential to become an important energy source at the crossroads between Europe and Asia due to the drastic energy shift in European, Eurasian and Asian energy landscapes. Recent developments indicate Turkmenistan could change future energy flows due to the war in Ukraine, which could also help its over-reliance on China.

The ups and downs of the global hydrocarbons market strongly affect Turkmenistan, for its economy and exports are heavily dependent on natural gas. The COVID-19 pandemic battered the country, reduced energy demand and worsened domestic woes, such as reported food shortages, emigration and inflation. The economy appears to have struggled to recover from the 2014-15 drop in global energy prices, with IMF data indicating negative growth in 2016, 2019 and 2020. In seeking to recover, Ashgabat appears to be focusing on increasing its dependence on China by enlarging pipeline capacity.

“111 billion hryvnias of Naftogaz subsidies will not stimulate energy-efficient behavior of the population" says Oleksiy Korchmit, Head of the Ukrainian Association of Energy Service Campaigns. According to the Cabinet of Ministers, gas should be enough for the heating season 2022-2023, although only 13.2 billion cubic meters were accumulated instead of the planned 19 billion cubic meters.

The European Union needs hydrogen imports as never before, hence Ukraine could be the new source, Poland a transit country and Germany the destination market. The condition for such co-operation, however, would be a Ukraine without Russian troops killing Ukrainians on its territory.

Over the last decade, the natural gas market in Central and Eastern Europe (CEE) has changed dramatically. Today, we are seeing more cross-border pipeline routes that are bi-directional and the possibility of greater liquified natural gas (LNG) imports. These changes will bring increased economic opportunities for the full market chain under EU rules. Hungary, Slovakia and Ukraine are emerging as key players in these developments.

Not long after the fall of the Soviet Union in the early 1990s, western policymakers began to think about how to reduce European reliance on Russian hydrocarbon resources by expanding Europe’s alternative sources. Much of the energy diplomacy undertaken since then has focused on building pipeline infrastructure designed to bring new sources of oil and gas to Europe that bypass Russia. Of course, this strategy has seen many large successes, with the development of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Southern Gas Corridor (SGC) perhaps the most notable examples.

On August 31st 2019 a Memorandum of Understanding was signed in Warsaw to strengthen gas security in the region through LNG supplies from the US via Polish and Ukrainian infrastructure. This formal document may lay the foundations for developing a new natural gas trading market in Europe.

Free of political barriers, access to a diverse range of energy sources is necessary for effective industrial development. European economies have become increasing concerned with energy security. This is largely the result of growing desires to end a dependence on supplies of gas and oil from the Russian Federation. The diversification of energy sources guarantees supply and promotes market liquidity. What actions should be taken in order to ensure this diversification? Will the Ukraine-Poland Interconnector and Baltic Pipe be able to guarantee a continuous supply of gas to the Polish and Ukrainian markets? What are the challenges faced by companies which manage infrastructural projects in the natural gas sector?

Since independence, Belarus has not been able to overcome its total dependence on Russian energy supplies. With the construction of a Belarusian nuclear power plant, this dependence will only become stronger.

As is well-known, Belarus purchases crude oil from Russia and so far has earned good money from it. It imports Russian oil without any tariffs, and only after exporting the processed oil does it generate export duties, which are then transferred to its own budget. Prior to 2015 Belarus had transferred it to the Russian budget, but since the announcement of the implementation by the Russian Federation of the "tax manoeuvre" in the oil industry, Minsk requested compensation for its costs, mainly due to the ratification of the treaty on the establishment of the Eurasian Economic Union (EEU). As a result, Moscow agreed to allow export duties on oil products from Belarus to be transferred directly to the Belarusian budget through 2024.

With the inauguration of Donald Trump, who has made no secret of his congeniality toward Vladimir Putin, there can be no over-estimating of the heightened anxiety when it comes to strategy that now reigns in Kyiv. The plans for a “grand bargaining” between the United States and Russia, which the US President has sought in order to counter the expansion of China's power, has Ukrainian leaders fearing that they will be nothing but a pawn on the negotiating board laid out between Moscow and Washington.

Over the past few months the Chief of Russia's Gazprom, Aleksei Miller, and Georgia’s Energy Minister Kakha Kaladze have been negotiating an energy deal between the two countries. The main issues on Georgia’s agenda have been its diversification plans and increasing energy consumption. Meanwhile, Georgia has not yet ruled out importing gas from Iran. According to Alireza Kameli, the Head of the National Iranian Gas Export Company, Georgian public and private sectors were interested in buying Iranian gas and Georgia and Iran have reached a preliminary agreement on the transportation of 500 mcm of gas to Georgia via Armenia. Georgia denied the statement, claiming that the two countries have not come up with any tangible agreement.

An interview with Natalia Slobodian, a National Centre for Strategic Studies energy expert living in Kyiv. Interviewer: Wojciech Jakóbik