Overview

Turkmenistan is a Central Asian state with considerable gas reserves. The country’s proven gas reserves in 2013 were 17.5 trillion cubic metres – 9.4% of the world’s total – according to BP.

The country’s largest field is Galkynysh, formerly known as the Yolotan-Osman field. It was discovered in 2007 and commercial development began in December 2009. It is being developed by Turkmenistan’s national company Turkmengaz and by China National Petroleum Corp. (CNPC).

CNPC has also been exploring and developing fields in the Bagtyyarlyk area since 2007, under a production-sharing agreement (PSA) with Turkmenistan’s Presidential State Agency for the Management and Use of Hydrocarbon Resources.

Turkmenistan is sending increasing volumes of gas to China via the Central Asia-China Pipeline (CACP). The country delivered 24.78 billion cubic metres in 2013, up from 22.26 bcm in 2012, according to Chinese customs data.

The first three trunk lines of the CACP have a combined capacity of 60 bcm and were launched in 2009, 2010 and 2014. A fourth 30 bcm line is planned. Uzbekistan and Kazakhstan also deliver gas through the CACP.

Turkmenistan supplies around 90% of China’s pipeline gas. Beijing is therefore an important customer and some analysts have raised concerns Turkmenistan is becoming too dependent on China as an export market.

Ashgabat is wary of foreign investment onshore; the only foreign companies with onshore PSAs are CNPC and Eni’s Burren Energy. Companies including Dragon Oil, Buried Hill, RWE and Itera have contracts to develop offshore.

Turkmenistan has also considered exporting gas westwards. However, discussions with Azerbaijan to pipe gas across the Caspian Sea to Azerbaijan and onwards to Europe have proved fruitless in the face of stiff opposition from Russia and Iran. Furthermore, industry observers believe Baku is unlikely to welcome Turkmenistan’s transit gas on its territory when it would compete with Azerbaijan’s own gas sales to western markets.

Another potential export route to Europe is through Iran, but Western sanctions against Tehran make this impossible for now.

Page updated: 24/09/2014