The Growing Importance of the Middle Corridor as an Energy Transport Route

January 2024

Giorgi Mukhigulishvili

Researcher in the fields of energy, climate change, and sustainability studies

The Middle Corridor is a novel multimodal transport route comprising diverse infrastructure undertakings that aims to enhance interconnectivity and trade between Asia and Europe through Central Asia, the Caspian Sea, and the South Caucasus. It is the shortest and fastest route compared to its rivals, the Northern and Southern Corridors. Its significance has surged during the Russia–Ukraine war and because of the Western sanctions imposed on Russia and Iran. The Middle Corridor has the potential to grow into a global initiative that will contribute to international peace and cooperation while improving the geopolitics, security, and economic ties between the two continents.

Among other opportunities, the Middle Corridor is becoming a more important route for the transportation of energy, and its significance is projected to increase in the years to come as the EU’s demand for energy resources rises and the transportation infrastructure along the corridor keeps growing. The corridor makes it possible to transport a variety of energy resources, including liquefied natural gas (LNG), natural gas, oil, green electricity, and renewable hydrogen, thereby accelerating the EU’s green transition. Exporting these resources to the EU can contribute to it achieving its target for renewable energy share in the total energy mix of 42.5% by 2030 and to increasing the union’s energy security (European Commission 2023).

By facilitating the transportation of energy resources, the Middle Corridor can help to create a common market for energy, as well as other goods and services, that can boost economic growth and trade in the region.

By strengthening ties with the EU and increasing economic integration through providing an alternative trade route for the West, the development of the Middle Corridor can weaken Russia’s influence on the countries of the region, both in Central Asia and the South Caucasus.
The existing infrastructure capacity along the Middle Corridor is currently, in the short term, insufficient to transport the amount of energy that Europe needs. However, the fossil and renewable energy resources in Central Asia and the South Caucasus are so abundant that they can easily meet the growing energy demand of Europe in the medium and long term.

Current Projects

After the collapse of the Soviet Union, important transport and energy transit projects were developed along the route of the Middle Corridor. For instance, the TRACECA (Transport Corridor Europe–Caucasus–Asia) project aimed to develop multimodal transportation routes, including by road, rail, and sea, to connect the Caspian Sea and Black Sea regions. At the end of the 1990s, the Western Route Export Pipeline (WREP, or Baku–Tbilisi–Supsa oil pipeline) was brought into operation. The South Caucasian Gas Pipeline (SCP, the SGC’s first pipeline chain, starting from Azerbaijan, passing through Georgia, and ending in Türkiye) and the Baku–Tbilisi–Ceyhan (BTC) oil pipeline, which today supplies Azerbaijani and Kazakh oil to the world market via Georgia and Türkiye, represented an important breakthrough.

The Baku–Tbilisi–Kars (BTK) railway, opened in 2017, is another significant development in the history of the Middle Corridor. It connects the railway systems of Azerbaijan, Georgia, and Türkiye, thus providing a direct rail link between Europe and Central Asia.

The idea of the Middle Corridor was enhanced by the ‘Memorandum on Strategic Partnership in the Energy Sector’ signed between the EU and Azerbaijan on 18 July 2022 (European Neighborhoud Policy 2022). The parties agreed that, by 2027, the volume of gas supply through the Southern Gas Corridor (SGC) would double and at least 20 bcm annually would be supplied to Europe. It is also planned to develop the production of renewable energy in Azerbaijan and its supply to Europe.

In the current energy crisis, the role of the Middle Corridor in connecting the energy-rich countries of the Caspian Sea basin with Europe through new and safer routes has become even more important.

Kazakhstan is a major oil producer in Central Asia, with significant proven reserves of oil (about 30 billion barrels) and gas (2.4 trillion cubic meters). In contrast, Turkmenistan has substantial natural gas reserves (more than 11 trillion cubic meters) and has been a major supplier of natural gas to neighboring countries. Uzbekistan has both oil and natural gas reserves and is a significant player in the Central Asian energy landscape. Tajikistan and Kyrgyzstan have smaller oil and gas reserves, and their energy sectors are less developed. They generally rely on imports to meet their energy needs.

Fossil-fuel-rich Central Asia also has a lot to offer in terms of renewable energy, mainly solar and wind, which can play an important role in the decarbonization of the Middle Corridor and enhance the green energy transition in Europe and the region. The production and export of green electricity and renewable hydrogen may be one way to promote renewable energy in the Middle Corridor.

According to an IEA assessment, the deserts of KaraKum (mainly in Turkmenistan) and KyzylKum (divided between Kazakhstan, Turkmenistan, and Uzbekistan) can accommodate 26.3 and 22.5 TW of solar panel capacity capable of producing, respectively, 30.4 and 26 thousand TWh annually, which is more than current world electricity production (International Eenergy Agency 2020). Another important site for renewable energy production in Central Asia is the Ustyurt Plateau, located between the Caspian and Aral Seas, and shared by Kazakhstan, Uzbekistan, and Turkmenistan. According to some estimates, this unoccupied flat clay desert has good solar potential alongside the highest wind potential in Central Asia. If only 20% of this territory could be exploited, it could generate an estimated 0.8 TW of wind or 2 TW of solar power, giving an estimated total of 2.4–2.8 thousand TWh of electricity production (Margvelashvili 2023).

The Potential of Central Asia

In addition, Central Asian countries, especially Kazakhstan and Uzbekistan, are rich in critical minerals, which are important raw materials in the production of renewable energy technologies. This further increases the competitiveness of the region and creates a favorable environment for investment (Bushuev 2023).
Considering the significant potential of green energy production, Central Asian countries could become globally competitive in renewable hydrogen production. Production of renewable hydrogen is an emerging technology that can support the development of intermittent renewable energy sources such as wind and solar; the energy from those technologies can be stored and transported using hydrogen as the energy carrier. The EU’s hydrogen strategy and REPowerEU plan aim to make hydrogen a key part of the energy mix by 2030, as it can help to reduce greenhouse gas (GHG) emissions and improve energy security (European Commission 2022).

However, there are several challenges in terms of resource development, such as: lack of modern production technologies in the region and therefore high extraction costs; limited capacities of transit infrastructure; political instability and the significant influence of Russia and China in the region; and difficulties in attracting investment from the EU (Bloomberg 2023).

For decades, the development of the Caspian Basin as an important source of fossil energy resources for Europe and the world was prevented by several factors. On the one hand, the effective resistance of Russia and Iran blocked the construction of the Trans-Caspian gas pipeline, while Russia itself became the supplier of Central Asian energy resources to Europe. On the other hand, the growing markets of China and India shifted Turkmenistan’s gas exports to the East. Nevertheless, significant reserves of energy resources remain untapped and are waiting for investment from the West (Lingling 2023).

The countries of Central Asia are looking for a higher degree of independence from Russia, which has proved itself to be an unreliable and monopolistic partner that disregards the sovereign interests of its neighbors. If Russia significantly cuts back or stops buying oil and gas from Kazakhstan and Turkmenistan due to its own excess production, those countries may start more active trade relations with European countries. The first examples of this can already be seen in Kazakhstan increasing its oil exports to Azerbaijan for the European market and Turkmenistan’s recently reached an agreement with Hungary on gas trade (Abbasova 2023).

The South Caucasus

Azerbaijan and Georgia are also important players in the Middle Corridor, as an energy producer and a transit country respectively, and each has significant potential in renewable energy sources. Azerbaijan is making every effort to increase its exports of hydrocarbons to the European market, and to help achieve this it plans to significantly promote energy efficiency and renewable energy production and to export the saved gas and oil. At the same time, Azerbaijan is increasing imports of gas for its own use from Turkmenistan through an Iran-enabled swap. In June 2022, Iran and Azerbaijan agreed to double (from the existing 1.5–2 bcm/y) the annual gas exchange from Turkmenistan to Azerbaijan via the Iranian pipeline system.

Along with oil pipelines, railways play an important role in the transportation of oil from Asia to Europe, doing so even in the 19th century. The Baku–Tbilisi–Batumi railway line, a vital artery linking the Caspian Sea and the Black Sea, became operational in 1883, allowing the transportation of Azerbaijani oil through the port of Batumi. Over the past decade, more than 38.7 million tons of Kazakh and Turkmen oil have been delivered to world markets by rail via the Azerbaijan-Georgia railway infrastructure (SOCAR 2021). So far, more than 14.8 million tons of transit oil products, including fuel oil, jet fuel, petrol, diesel, and gas oil, have been transported to Georgia and exported to world markets. The modern Alat Port of Baku is connected by railway to the ports of Batumi and Poti on the Black Sea of Georgia. The Port of Baku is also well connected to the newly developed BTK railway line connecting Azerbaijan, Georgia, and Türkiye, which became operational on 30 October 2017. This route provides transportation of goods from Central Asia, primarily oil and oil products, to ports on the Mediterranean Sea in Türkiye and, subsequently, to world markets. Despite BTK providing significant transit opportunities to Georgia, the capacity of the Akhalkalaki line is not fully utilized for unknown reasons (Radiotavisupleba 2023).

The significance of Georgian ports as gateways to the Black Sea cannot be overstated. Companies from Georgia, Azerbaijan, and Kazakhstan have launched new feeder vessels operating between Poti and Constanta (Romania), while Denmark’s Mærsk and Finland’s Nurminen Logistics have joined the Middle Corridor initiative (Eldem 2023). The EU’s support under the Trans-European Transport Network (TEN-T) programme would further boost the corridor’s capacity.

The Trans-Caspian Pipeline and Challanges

In the framework of the Middle Corridor, one of the critical project ideas is the Trans-Caspian Pipeline (TCP), a proposed undersea pipeline that would transport 30 bcm of gas annually from Turkmenistan to Azerbaijan and then to Europe. The TCP is seen as a way to diversify European gas supplies and reduce the continent’s dependence on Russia. The TCP has been on the agenda since the United States first suggested the project in 1996, but construction has not yet begun due to border disputes among the five littoral states of the Caspian Sea and the resistance of Iran and Russia.
However, the last four years have seen the most remarkable and dynamic changes in the Caspian and South Caucasus regions. The Caspian Convention, which has a provision that undersea pipelines may be constructed by countries involved in the project without requiring others to first approve, was signed in 2018. Azerbaijan and Turkmenistan have also opened a new era in their bilateral relations, culminating in January 2021 with a memorandum of understanding (MoU) on the joint development of the offshore ‘Dostluk’ field, raising hopes for the realization of the TCP. The TCP would be an eastward extension of the SGC and would increase the latter’s capacity in the future. In light of the Russia–Ukraine war and induced energy crisis, the TCP pipeline is receiving renewed attention. The EU and the United States should seize this opportunity to increase their support for the project.

In addition to the TCP gas pipeline, other projects such as the Azerbaijan–Georgia–Romania Interconnector (AGRI) for LNG and the White Stream pipeline should not be overlooked. These projects were previously supported by the EU and could be revived in light of current events in the region for the further development of the Middle Corridor (Azernews 2023).

Georgia, Azerbaijan, Romania, and Hungary have already reached an agreement on the development of the Black Sea Submarine Power Cable; this was signed at a meeting in Bucharest on 17 December 2022. It will be the longest (1,100 km) underwater power cable in the world, aiming to connect the South Caucasus region with southeastern Europe and involving the electricity systems of Azerbaijan, Georgia, Romania and Hungary, and continental Europe. Within the framework of the project, a high-speed fibre optic internet cable is also being considered, which will increase the security of information transmission between the regions, bypassing Russia. According to the President of the European Commission, Ursula von der Leyen, the Black Sea submarine cable is “an ambitious project. It would connect us on both sides of the Black Sea and run further towards the Caspian Sea region both for digital communication and for energy. It will help reinforce our security of supply by bringing electricity from renewable sources to the European Union.” A feasibility study of the submarine cable is ongoing and will be completed in the first half of 2024.

Navigating Challenges and Opportunities

Overall, Central Asia and the South Caucasus offer a wide range of fossil and renewable energy sources and export routes, which can significantly improve the EU’s energy security and be instrumental in the growth of the Middle Corridor. The Middle Corridor facilitates the export of significant amounts of fossil fuels and, by developing large-capacity renewable energy, can help to decarbonize the corridor and aid the EU in meeting its renewable energy target. It is also the shortest and safest alternate route to the North and South routes. Despite numerous obstacles – economic, political, and technical – that have prevented the corridor’s rapid and extensive development, the current situation in the world is creating momentum for its growth.

Much depends on whether the energy-rich countries of Central Asia manage to break free from Russian influence and actively begin negotiations and cooperation with the EU to increase production and export on the scale required to meet Europe’s current deficit. This is an urgent moment, because fossil energy resources may soon become a thing of the past in light of the development of green and clean energy sources, and countries’ decarbonization commitments. Viewing this from the perspective of national interests is crucial; however, the world as a whole, and these nations themselves, will benefit most from a larger-scale vision at this time.


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