The Turkish government announced this week a deal between Turkey’s state-owned pipeline operator BOTAŞ and Turkmenistan’s Turkmengaz. According to the agreement, gas flow between the two countries is set to commence on March 1, 2025. Under a swap deal, Turkmenistan will supply up to 2 bcm annually to Turkey, utilizing Iran’s existing gas infrastructure. The gas will be sent to Iran, and Turkey will receive the same volume through the Iran-Turkey Natural Gas Pipeline.
This agreement follows years of negotiations and reflects Turkey’s broader strategy to establish itself as a regional energy hub. While this swap deal contributes to Turkey’s long-standing goal of diversifying energy imports and reducing dependency on Russian gas, significant structural challenges may hinder the sustainability of Turkmen gas as a reliable supply source.
The Iranian Bottleneck: Sanctions and Capacity Constraints
Turkey intends to purchase 300 bcm of Turkmen gas over the next 20 years, and this deal could mark the beginning of that goal. However, despite its significance, the agreement has an inherent flaw—it is contingent on Iran's willingness and ability to serve as a transit country. This introduces two major risks.
First, Iran has a history of prioritizing domestic energy needs over fulfilling export commitments, especially in winter months when demand for heating and electricity spikes. In the past, Tehran has halted gas supplies to Turkey on several occasions, citing technical difficulties exacerbated by freezing temperatures. Given that Iran’s gas sector suffers from underinvestment and aging infrastructure due to international sanctions, its ability to maintain consistent gas flows remains uncertain. The new swap deal is therefore vulnerable to the same disruptions that have plagued past agreements.
Second, Iran is likely to face a new round of sanctions targeting its energy sector, raising concerns about the long-term feasibility of using its infrastructure as a transit route. The Trump administration is reportedly planning severe sanctions on Iran over its nuclear program. According to U.S. sources, these measures could cut Iran’s oil exports by 500,000 to 750,000 barrels per day. If natural gas exports are included in these sanctions, the viability of the Turkmenistan-Turkey swap agreement could be severely undermined. Even if Turkey applies for exemptions, the process is often lengthy and challenging. When it did so in the 2010s, it faced difficulties obtaining exemptions from both U.S. and UN sanctions, which targeted Iran’s energy sector.
The Caspian Sea Route: Legal and Political Barriers
Given the risks associated with relying on Iran as a transit route, Turkey and Turkmenistan have long explored an alternative: a direct pipeline across the Caspian Sea to Azerbaijan, which would then link to Turkey via the Southern Gas Corridor. While technically feasible, this project faces significant political and legal challenges.
The primary obstacle is the unresolved legal status of the Caspian Sea. The five littoral states—Azerbaijan, Turkmenistan, Kazakhstan, Iran, and Russia—signed the Convention on the Legal Status of the Caspian Sea on August 12, 2018. The convention facilitates pipeline development but leaves key legal issues unresolved, particularly the seabed delineation.
Russia and Iran have viewed a trans-Caspian pipeline as a threat to their influence over regional energy exports. Moscow, in particular, is wary of Turkmenistan increasing its gas exports to markets that bypass Russian infrastructure. Turkey consumes over 50 bcm of natural gas annually, with Russia supplying more than 40% of its needs.
Beyond geopolitical obstacles, as I discussed in one of my previous articles, the success of a trans-Caspian pipeline also depends on securing long-term financial commitments. Pipeline infrastructure requires extensive investment, and financiers typically demand supply contracts lasting at least 20 years to ensure profitability. For example, the TurkStream agreement with Russia is set to last 30 years, while the Iran-Turkey Gas Pipeline agreement spans 25 years. Without similar long-term guarantees from Turkmenistan and Azerbaijan, the economic feasibility of a trans-Caspian pipeline remains uncertain.
Turkey’s latest agreement with Turkmenistan represents a positive step in its quest to diversify energy imports. However, the deal remains constrained by its reliance on Iran as a transit country, which introduces both geopolitical and technical risks. The alternative—building a trans-Caspian pipeline—faces its own hurdles, particularly unresolved legal disputes and Russian opposition. Without a resolution to these issues, Turkmenistan is unlikely to emerge as a major supplier to Turkey, let alone Europe.
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