Turkmenistan Natural Gas
Agriculture accounts for the largest share of employment, but the current economic model is based on the country’s gas and oil reserves. Any precise information about the volume of Turkmenistan gas reserves is treated as a state secret by the government. Information about their actual size is accordingly uncertain. Nevertheless, some independent observers have made estimates based on, for example, the gas pressure of individual extraction sites, the known extent of some gas fields as well as the geological conditions and Soviet exploration measures, according to which Turkmenistan has a minimum of 4.5 trillion m³ to a maximum of 17.5 trillion m³. The European Union even states reserves of around 25 trillion m³, Turkmenistan would have the third largest gas reserves in the world, ahead of Qatar. In any case, there is no doubt that Turkmenistan has the second largest and second most productive gas field in the world with the “Galkynysh” gas field (old name: “South Yoloten Gasfield”).
Despite all the uncertainty regarding the exact size of the Turkmenistan gas reserves, there is broad agreement among international observers that Turkmenistan is one of the four countries with the largest reserves of conventionally stored gas in the world. Assuming the current annual extraction volume, these reserves will last (without new finds) for about 250 years. In addition, the geological and climatic conditions simplify gas production in Turkmenistan and make it correspondingly cheap:
- The gas is distributed over a few very large individual fields. For example, the South-Yolotan field, located southeast of the capital, is one of the largest contiguous gas fields in the world.
- With a few exceptions, the gas fields are located relatively close to the surface and at the same time beneath very stable, hard rock layers. This rare combination simplifies development and cuts costs considerably
- The climatic conditions also simplify gas extraction. Due to the very low humidity, the material used hardly corrodes. The temperatures allow year-round production.
- Most of the gas fields are in the onshore area, which is much easier to develop. The development of these gas fields takes place primarily in cooperation with Chinese partners. In contrast, the DEA-Group was supported with the exploration of the technically much more demanding gas fields in the offshore area (Block 23). The situation here is further complicated by the unstable storage, the softer and, moreover, more complicated subsoil and the high seismic activity. After a DEA in 2010 Office in Ashgabat had opened and in 2012, seismic surveys had received the fields unbridgeable appeared soon administrative challenges associated with corresponding delays and the permanent need to finance activities that are not directly relevant to the company in the country. As a result, DEA announced in 2015 that it would end its activities in Turkmenistan with immediate effect.
According to fashionissupreme, the great importance of gas extraction due to these prerequisites can already be seen in a list of the largest Turkmenistan companies in terms of turnover. These are:
- Turkmengaz (natural gas extraction)
- Turkzutologiya (oil exploration)
- Turkmenneft (oil exploration)
- Turkmenneftegaz (oil and gas trade)
- Turkmenneft-gazstroy (construction of oil and gas plants)
The annual income from gas exports is also traded as a state secret by the Turkmenistan government and is largely administered directly by the president and his advisory staff. It is estimated that revenues are between $ 8 billion and $ 10 billion per year.
The export of natural gas via two smaller pipelines to Iran (Korpeje-Kordkij pipeline and Dowlatabad-Sarakhs-Khangiran pipeline), a newly opened high-volume pipeline to China (the building was a parallel strand for increasing the capacity in the spring of 2016 for an indefinite period suspended), a Soviet pipeline to Russia and the gas liquefaction plant in Turkmenbashi.
After disputes between Turkmenistan and Russia, gas exports to Russia were stopped in early 2016. Disputes between Turkmenistan and Iran triggered the suspension of deliveries to the southern neighbor at the end of 2016. Since the capacity of the Turmenbaschi gas liquefaction plant is not being used at the same time (nothing is known about the countries where Turkmenistan liquid gas is bought), China is currently the only relevant buyer of Turkmenistan natural gas.
According to the agreement concluded with Turkmenistan, China is free to determine the amount of gas it imports at any time. At the same time, the contract stipulates that, although Turkmenistan does not have to contribute financially to the construction of the pipeline, it has to compensate for the construction by supplying natural gas. In accordance with the estimated value of the pipeline, Turkmenistan will receive very little income for the supply of natural gas to China for many years to come. In addition, China has significantly reduced the amount of gas it imports since 2016, so that, contrary to the original estimates, the payment of the pipeline will be further delayed and the first income from the China deal will be a long way off.
In general, the Turkmenistan gas industry and thus the Turkmenistan economy suffers from numerous challenges. These include, in particular, the outdated infrastructure, insufficient capacities to service the export contracts concluded at the political level, the conditions in the export contracts concluded that are extremely negative for Turkmenistan and a lack of know-how to implement the exploration and extraction targets, which are both ambitious and essential for economic reasons.