China turns to Turkmenistan for gas

China is set to sign an agreement with Turkmenistan later this year to boost its future annual natural gas purchases by 20 billion cubic meters, state newspaper Neutral Turkmenistan reported. The deal means Turkmenistan’s annual gas sales to China will eventually reach 60 billion cubic meters. The deal comes as Russian gas monopoly Gazprom has yet to agree on prices and pipeline routes.

“Turkmenistan has enormous oil and gas reserves,” Oil Minister Bayramgeldy Nedirov said at an oil and gas conference in Singapore recently. “There are 160 discovered fields and 50 under development.” The country, holder of the world’s fourth-largest gas reserves, opened a link to China in 2009 as shipments to Russia collapsed following an explosion on a Soviet-era pipeline in April of that year.  Turkmenistan will sell 17 billion cubic meters of the fuel to China this year and 20 billion next year, Turkmenistan’s First Deputy Prime Minister Baymurat Hojamuhamedov was quoted as saying by the press in Singapore. Turkmenistan sent 2.59 million metric tons, or about 2.9 billion cubic meters, last year, according to China’s customs data.

Turkmen President Gurbanguli Berdymukhamedov is set to visit China later this year to formalize the deal. Turkmenistan already has existing gas contracts with Russia and Iran, and has expressed ambitions to also begin exporting to Europe, Afghanistan, Pakistan and India.

The international conference “Environmental Aspects of Trans-Caspian pipelines,” organized by the Turkmen Ministry of Petroleum and Mineral Resources in Ashgabat two weeks ago discussed plans to transport Turkmen gas towards the Caspian Sea, then to Azerbaijan through the trans-Caspian pipeline across the Caspian Sea bed and eventually to Europe via the Baku-Tbilisi-Erzurum gas pipeline and Nabucco.

However, since there are still some issues regarding these plans, as there has been no final decision over the Caspian Sea status, building a pipeline across the Caspian Sea in the near future seems unlikely. “Turkmenistan is a pie in the sky,” an industry source from one of the competing consortiums in Europe’s Southern Corridor told New Europe early in March. “Turkmenistan will build the Trans-Caspian pipeline only if Russia allows it,” the source said.

The director of the independent National Energy Security Foundation, Konstantin Simonov, told New Europe that European Commission President Jose Manuel Barroso did not give Berdimuhammedov the political guarantees the later wanted to proceed with the Trans-Caspian part of the pipeline. During his visit to Ashgabat, Barroso was trying to press on Turkmenistan to show that Europe supports this project. And Turkmenistan wants to build this pipeline to Europe through Azerbaijan and Georgia because it will allow Ashgabat to export gas to Europe bypassing Russia. From a technical point of view it is not a problem to build this pipeline and Azerbaijan is also ready. “Europe and United States are trying to press on Turkmenistan but they still do not give any serious guarantees to Turkmenistan,” Simonov said.

New Europe, 14 March 2011