Books on Turkmenistan
Update No: 332 - (29/08/08)
The looming cloud
The situation in the Caucasus is putting a cloud over the otherwise excellent
prospects of Turkmenistan, given sky-high prices of oil and gas and its
abundance of both.
For its most promising route to world markets lies across the troubled Caucasus
region, beset by perpetual conflict.
Energy giant in Central Asia
Turkmenistan is one of several Central Asian states that have made great strides
in developing their energy resources since achieving independence from the
former Soviet Union. Best known as a prolific gas producer, the country last
year increased its gas output by 8.5 % to 67.4 billion cubic metres and its oil
production by 6.5 % to 198,000 barrels a day.
Most of Turkmenistan’s 'estimated' 2.7 trillion cubic metres of proved gas
reserves and 600 million barrels of oil reserves lie beneath the Karakum desert,
which covers 85 % of the country’s land surface. But it also has significant
offshore oil and gas deposits in the Caspian Sea.
Caspian pipeline gets go-ahead
The most recent initiatives of the Turkmen president provide a new stimulus to
relations between countries and nations. The Caspian gas pipeline project
initiated by the Turkmen head of state can also be described as an energy bridge
between Asia and Europe.
The Caspian gas pipeline project, the biggest of this kind in the region, has
now entered the phase of practical implementation. Though the intergovernmental
accord on the construction of the Caspian pipeline envisages the delivery of up
to 10bn cu.m. of gas a year to Turkmenistan's borders, at the same time, the
reconstruction of currently operating gas pipelines and the construction of a
new one, makes it possible to increase the throughput capacity of the network up
to 20bn cu.m. of Turkmen natural gas. This also shows that the Turkmen side
approaches this project from the point of view of long-term strategic interests.
The main supervisor of the entire project from the Turkmen side is the state
agency for the management and use of hydrocarbon resources under the president
of Turkmenistan. The construction of the 200-km Turkmen sector of the pipeline
will be carried out by the Turkmengaz [Turkmen Gas] state concern. Subdivisions
of the Turkmennebitgazgurlusyk [Turkmen oil and gas construction] state concern
will also be among subcontractors. Under the current agreement, each country has
to build its own sector.
Taking into account the fact that the project also covers a number of other
areas, such as the reconstruction of operating and the construction of new
pumping stations, and facilities for gas processing facilities, systems of
electrochemical protection of the pipeline network, as well as many other areas,
other interested partners would also be attracted to it.
Once constructed, the Caspian gas pipeline, on the one hand, would expand access
by Turkmenistan, Kazakhstan and Russia, which are big natural gas exporters, to
the energy-consuming European market, and on the other hand, will produce a
powerful stimulus to further progress of the oil and gas infrastructures of the
Caspian region, rich energy resources of which are becoming even more attractive
to the world business circles.
As a matter of fact, there is a history of pipeline projects, loudly trumpeted
never coming to completion.
Gazprom comes to town with Medvedev
Russia is to boost the volume of gas it imports from the key producer
Turkmenistan, the CEO of Gazprom said recently, amid growing competition for the
ex-Soviet country’s energy riches.
Alexei Miller made the comments in the Turkmen capital Ashgabat during a visit
by Medvedev, who had energy talks with President Gurbanguly Berdymukhamedov.
“We are in the process of increasing the volume of deliveries of Turkmen
gas”, said Miller. “This year they will be greater than last year”.
The two sides failed, however, to agree on how much Moscow would pay for the gas
and when a proposed new pipeline between the countries would be completed,
Amid increased competition for Turkmenistan’s gas reserves from both Europe
and China, Moscow has already agreed to a rise in prices it pays to Turkmenistan
to $15 0 (95 euros), up from $100 last year. But this remains far lower than the
price charged to European customers of almost $400 per cubic meter and pricing
talks will continue, Medvedev advisor Sergei Prikhodko said after the talks.
A guaranteed supply of Turkmen gas is key to the planned pipeline from
Turkmenistan to Russia via Kazakhstan that would consolidate Moscow’s grip on
gas supplies from Central Asia to Europe.
Its success would undermine a Western-backed bid to reduce dependence on Moscow
by pumping Turkmen gas through the planned Nabucco pipeline.
While Russia holds the world’s largest gas reserves, lack of development means
it is forced to help meet rising internal demand for Russia’s growing economy
by supplementing its supplies with imports from Turkmenistan. But Russia is
facing increased competition in the former Soviet Union, both from Europe and
from China, which recently secured a promise for 30 billion cubic metres of gas,
almost half of current Turkmen production.
In April, the European Commission said it had secured a promise from
Berdymukhamedov to deliver 10 billion cubic metres of gas annually from 2009,
but Turkmenistan has never confirmed this.
Some analysts have cast doubt on whether Turkmenistan has much gas to offer,
with most of its current production already accounted for.
The independent audit of the actual reserves is not yet published!
Turkmenistan currently supplies 50 billion cubic metres of gas to Russia and
uses 20 billion cubic metres domestically, together using up the vast majority
of production, which totalled 72.3 billion cubic metres in 2007.
Dragon Oil in success
Dragon Oil, a Dubai-based energy producer, said its programme to accelerate the
development of two oil fields in the Caspian Sea is on track following the
completion of its fifth development well this year.
The publicly traded company, whose shares are listed on the London and Irish
stock exchanges, said its latest oil well, drilled to a depth of 3,848 metres,
produced 2,600 barrels per day (bpd) following initial testing. Dragon said it
would soon20start drilling another well, which is scheduled for completion in
“We are confident we will meet our 2008 targets for both the number of wells
drilled and production,” said Hussain M Sultan, the company’s executive
Dragon’s main producing asset is the Cheleken Contract Area in the eastern
Caspian Sea off Turkmenistan’s shore, where the company is seeking to
redevelop two shallow-water oil and gas fields that were discovered during the
Soviet era. Dragon’s average oil production from the area last year was 31,997
bpd. It said it plans to spend US$400 million (Dh1.47 billion) on oil field
infrastructure in its concession area over this year and next year.
Dragon said it also plans to produce gas from the fields. The country, which
exports gas to Iran and Russia, is also, it says building a pipeline to China.
On July 15, official state media said Turkmenistan had agreed to start building
another cross-border pipeline that would be completed in March 2010 with the
capacity to transport up to 10 billion cubic metres of Caspian gas to Russia.