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. Last Updated: 07/27/2016

Consortium Puts Turkmen Gas Pipeline Plan on Hold

ASHGABAT, Turkmenistan -- The consortium hoping to build a gas pipeline from Turkmenistan to Turkey via the Caspian Sea said Monday that it was cutting spending and staff in response to slow progress in talks with the Turkmen government.

Jane Upperton, external affairs adviser at the TransCaspian Gas Pipeline, said from London that the U.S.-British consortium was disappointed not to have received a response to its revised proposal submitted to the Ashgabat on March 20.

The planned 2,000-kilometer pipeline would run from Turkmenistan, on the east of the Caspian, to Turkey via the Caspian seabed, Azerbaijan and Georgia and would cost around $2 billion.

It is a key part of U.S. energy policy in the resource-rich region aimed at running oil and gas export routes from east to west to bypass Russia to the north and Iran to the south.

"The time it takes to get this pipeline built very much depends on the government of Turkmenistan - the ball is firmly in their court," Upperton said.

Sources close to the U.S.-British consortium, which groups British-Dutch Royal Dutch Shell with Bechtel and General Electric Capital of the United States, said the March 20 proposal was fair to both sides.

But Turkmen President Saparmurat Niyazov has yet to approve it, saying it was not he who was delaying the project but the consortium itself.

Sources in Turkmenistan have said Niyazov is displeased with the consortium's scheme for splitting the pipeline profits.

Upperton said there would be some layoffs as the result of the decision, although most employees would find places in the sponsor companies while the consortium waited.

The TransCaspian Gas Pipeline would carry up to 30 billion cubic meters of gas to hard currency markets and reduce Turkmenistan's almost total reliance on Russia to get its gas to market.

Turkmenistan already has an agreement with Moscow to pump 20 bcm of gas via Russia in 2000.

During last week's visit to the Turkmen capital of Ashgabat, President Vladimir Putin agreed to increase this by 10 bcm a year.

But he said the key issue of pricing had yet to be agreed.

The inconclusive outcome of Putin's visit and the setback for the U.S.-backed trans-Caspian line are causing growing frustration among potential partners looking to win strategic control over Turkmenistan's main export outlet.