US Sanctions Push Turkmenistan Back to the Trans-Caspian Dream

A recent decision by Washington to block Iraq from importing natural gas from Turkmenistan via a swap arrangement with Iran has sent ripples through the Eurasian energy landscape. While the move was part of an effort to tighten sanctions on Tehran, it has created energy headaches for Baghdad and, critically, may have just re-energized the long-dormant ambition for a Trans-Caspian Pipeline (TCP) to Europe.

The viability of this key western energy route is now intrinsically linked to political and security developments in the South Caucasus, particularly the opening of the Zengezur Corridor.

The Sanctions Ripple Effect

Washington’s block impacts several players:

• Iraq: Baghdad desperately needs the gas to ease crippling power shortages. The plan to use Turkmen gas as a quick fix while developing its own under-exploited, and often politically contested, gas reserves is now stalled.
• Turkmenistan: While the 5 billion cubic meters (bcm) for Iraq is a small fraction of the 34 bcm Ashgabat ships to China, the decision raises questions about the country’s entire strategy of relying on regional neighbors and Iran’s domestic transit infrastructure.
• Turkey’s Deal is Paused: A similar Turkmen gas swap deal with Turkey, intended to receive 1.3 bcm of gas this year, also appears to be on hold for unspecified “technical reasons,” according to Turkmengas CEO Maksat Babayev. Given the US block on the Iraq deal, the Iranian swap structure is the likely sticking point here as well. Turkmenistan’s history of tough gas pricing negotiations (which scuttled a 2022 deal with Azerbaijan) adds complexity, but the geopolitical risk of relying on Iran’s transit capacity is now clear.

A Renewed Commitment to the West

Faced with rising geopolitical risk, Ashgabat appears to be pivoting toward its biggest potential new market: Europe.

Turkmen Foreign Minister Rashid Meredov recently confirmed the country’s commitment to reviving the “Silk Road” concept, stating Ashgabat is dedicated to creating a “stable energy corridor along the Caspian Sea-South Caucasus-European route.”

This ambition is welcome news for Azerbaijan. Baku has consistently prioritized exporting its own gas reserves but has struggled to boost output from its Shah Deniz and Azeri-Chirag-Guneshli fields. Consequently, Azerbaijani officials have acknowledged they will fall short of their promise to double gas exports to the European Union to 20 bcm annually. Additional volumes of Turkmen gas via a TCP would help Baku meet these critical delivery commitments to the West.

If Turkmenistan, Azerbaijan, and Turkey are all firmly on board, investors would be far more likely to commit the necessary financing to build the TCP and expand existing pipeline capacity through Azerbaijan and Turkey.

🛑 Zengezur Corridor: The Critical Geopolitical Variable

The construction of the Trans-Caspian Pipeline and the smooth expansion of gas flow through the South Caucasus are conditional upon the normalization of relations between Azerbaijan and Armenia, a process inextricably tied to the opening of the Zengezur Corridor.

Assessment of Recent Developments

The Zengezur Corridor is the proposed land route linking Azerbaijan’s main territory with its exclave, Nakhchivan, which would run through southern Armenia.

• Baku’s Strategic Priority: For Azerbaijan, this corridor is a non-negotiable strategic and economic priority. It would complete the ‘Middle Corridor’ trade route from Central Asia to Turkey and Europe. Critically, it would facilitate the easy construction and operation of additional energy and transport infrastructure necessary for the TCP’s expansion, including the potential transit of gas via a pipeline built along this envisioned land corridor.
• Recent Stalemate: Despite Azerbaijan’s decisive military actions in Karabakh, the opening of the Zengezur Corridor remains stalled. Armenia maintains that while it is prepared to allow transit through its territory, it will not cede sovereignty or allow the route to be controlled by foreign (specifically Azerbaijani) border services, as Baku demands.
• Impact on TCP: The political tension surrounding this route creates security and permitting uncertainties for major infrastructure projects like the TCP expansion. While gas can technically flow without the Zengezur Corridor, its full and normalized opening would significantly lower the political risk premium for investors and ensure the most efficient, secure, and robust transit capacity for Central Asian energy bound for Europe.

In summary, US sanctions have given the Trans-Caspian Pipeline its best geopolitical push in years. However, the ultimate success of the TCP and its ability to deliver meaningful volumes to Europe is still tethered to a swift and peaceful resolution over the Zengezur Corridor, which remains the single most important geopolitical hurdle in the South Caucasus.