Turkmenistan pitches its gas to investors [Global Gas Perspectives]
Turkmenistan is continuing its search for international partners and financiers to drive forward its massive natural gas production and export projects, amid growing global competition for investment, NGW reports following the OGT-2024 forum in Ashgabat October 23-25.
The Central Asian country is endowed with the world’s fourth largest natural gas reserves after Russia, Iran and Qatar, with the giant Galkynysh field in the country’s east considered the second largest gas deposit. Yet its huge production potential is mostly unrealised because of a lack of access to international markets.
In the opening session at OGT-2024, Maksat Babayev, the chairman of state gas concern Turkmengas, stressed that Turkmenistan was a “reliable partner for cooperation and investment in the oil and gas sector,” citing the country’s political and economic stability and its compliance with international law.
Expansion plans
Turkmenistan’s government aims to ramp up national production to 116bn m3 annually by 2029, from 80.6bn m3 last year, with half of this future amount to be exported, the head of gas transport and supply at state-owned Turkmengas, Rustem Tekayev, told OGT-2024 attendees.
Currently, Turkmenistan’s top customer for gas is China, with deliveries reaching almost 33bn m3 in 2022 via the Central Asia-China pipeline. It previously carried out gas swaps with Iran and Azerbaijan but these were halted in January this year. A contract for the export of up to 5.5bn m3/yr to Russia also expired at the end of June, and has not been renewed yet because the two sides disagreed on pricing, Babayev confirmed at the forum. He did not rule out that supplies might resume at a later stage.
Turkmenistan also sells gas to neighbouring Uzbekistan.
Looking forward, the country is pressing on with plans to open up the southeast Asian market by constructing the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, which would run for over 1,800 km carrying up to 33bn m3/yr of gas. The 214-km Turkmen section of TAPI is complete, and in September, work officially started on a critical segment in Afghanistan.
“In principle, every large project faces certain difficulties, of course, TAPI is no exception,” Muhammetmyrat Amanov, CEO of TAPI Pipeline Company, said at the forum. “Security issues, especially in Afghanistan, are quite acute, but we see that the security situation there is significantly improving, giving us the opportunity to move forward.” Cooperation continues with international partners and investors to secure funding for the project, he said.
There is also a proposal to add a fourth, 30bn m3/year string, known as Line D, to the Central Asia-China pipeline, to boost flow to the Chinese market. In discussing the project, Babayev noted that gas consumption in China was growing.
Turkmenistan aims to reach other markets westwards. In July, it reached an agreement with Iran on the delivery of up to 10bn m3/yr of gas, for onward shipment to Iraq. It then signed a memorandum with Iraq on these supplies earlier this month.
Galkynysh plans
Both TAPI and Line D are to be underpinned by further development of Galkynysh. The field is estimated by global consultancy GaffneyCline to hold 18.4 trillion m3 of initially-in-place gas in the base case, while its two satellite deposits Yashlar and Garakol add a further 2.65 trillion m3 and 800bn m3 respectively.
Galkynysh is currently only in pilot operation, with 52 wells on stream with an average design flow rate of 1.5mn m3/day each, or nearly 28.5bn m3/yr in total, and the drilling of a further 10 underway, Irina Luryeva, head of Turkmengas’ gas research institute, said. But its development will consist of seven phases in total, with the second alone set to add a further 20bn m3/yr of production capacity.
By 2030, production at the field is expected to reach 160mn m3/d, or 58.4bn m3/yr, according to GaffneyCline’s director Steven Travers. “This will open new opportunities for economic growth and the energy security of the state,” he said.
Each production phase will have a lifetime of over 30 years, GaffneyCline estimates. Total annual production could reach nearly 200bn m3/yr, Luryeva said.
Turkmenistan is in talks to secure investments for Galkynysh’s second and third stages, Babayev said, anticipating a “breakthrough” in this process by the end of the first quarter of next year. Agreeing a contract for starting the second stage of development is in the final phase, he said. Turkmengas also reached a preliminary deal with the UAE’s ADNOC on the latter’s participation in Galkynysh’s third stage in January this year.
Meanwhile, Kazakhstan is negotiating its involvement in the TAPI pipeline, its deputy energy minister Yerlan Akkenzhanov confirmed at a forum in Almaty on October 22.
Investment opportunities elsewhere
Turkmengas’ Babayev also pointed to other partnership opportunities for international investors, including at projects to enhance gas production at mature fields, develop petrochemicals and construct underground gas storage facilities.
“Turkmenistan’s energy policy is based on the principles of neutrality and multi-vector nature,” he said. “We are open to mutually beneficial cooperation with all interested parties.”
Though most of Turkmenistan’s known oil and gas reserves are located onshore, the country is also looking to attract foreign partners to drive development of offshore resources in the Caspian Sea. Currently, only two projects are in production off Turkmenistan’s coast: Block 1, developed by Malaysia’s Petronas, and Cheleken, operated by Dubai-based Dragon Oil. Both have been flowing oil and gas for more than two decades.
Guvanch Agajanov, chairman of state oil company Turkmennebit, said other investment partnerships were available at blocks 11, 12, 16, 21 and 23. These partnerships can take the form of production-sharing, concession, joint venture and risk service agreements. 2D seismic surveys have been carried out at all of the blocks, while 3D surveys and exploratory drilling has taken place at only some of them.