CNPC to drill Turkmen wells in return for extra gas
Chinese oil group CNPC has begun work on three new wells at the giant Galkynysh field in eastern Turkmenistan, which it has agreed to drill in exchange for extra Turkmen gas, Turkmen state-run media reported on August 24.
Turkmenistan is among China's biggest gas suppliers, delivering 29bn m3 of gas in 2020, down 14% year on year as a result of the impact of the pandemic on Chinese demand. Turkmenistan is been pushing for years to send more gas, though China is wary of relying too much on a single supplier.
According to Turkmen media reports, CNPC is expected to take two and a half years to finish the wells, which will have a flow rate of 3mn m3/day each. In return, the Chinese company will get 17bn m3/year of Turkmen gas over three years, or 51bn m3 in total.
Turkmenistan has the world's fourth largest proven gas reserves, assessed by BP at 13.6 trillion m3. But it has long struggled with insufficient export options. Its only major customer was Russia's Gazprom until 2010, when the Central Asia-China pipeline system was commissioned, allowing flows to China.
Most of the gas that China takes comes from Galkynysh and other fields controlled by Turkmenistan's national gas producer Turkmengaz, although some supplies are also sent from the CNPC-operated Bagtyarlyk block.
The Central Asia-China pipeline can send up to 55bn m3/year of gas. While most of this capacity is used for Turkmen gas, it also handles supplies from Kazakhstan and Uzbekistan. There was a plan to add a fourth 30bn m3/yr string to the network, but this project has been indefinitely shelved.
Turkmen state media reported in June that Turkmenistan had settled for Chinese debts it had accrued to develop its upstream sector.