Books on Turkmenistan
Update No: 356 -
The Turkmen hotspot
Turkmenistan is one of the biggest energy
giants of all time. Its portion of the
Caspian Sea holds an estimated 11 billion
tonnes of oil and 5.5 tcm of gas; 32
licensed blocks are up for tender.
It was in Soviet times totally under the
wing of Moscow. It naturally wishes to
diversify from the Muscovite embrace.
It has a new ruler, President Kurbanguly
Berdymukhmedov, who was the dentist of
former president Saparmurat Niyazov, who
died in December 2007. He bears a striking
resemblance to him, except of course with
more glossy black hair. A chip off the old
Well, he clearly wants to be his own man.
This means courting the West - but also
U.S. majors win first offshore oil
Turkmenistan on August 13 offered U.S.
energy majors their first concessions in
the Central Asian state and said it was
pursuing a $4.1 billion loan from China to
develop one of the world's five largest
natural gas fields and ship the gas east.
State television named Chevron Corp,
ConocoPhillips, Houston-based TXOil Ltd
and Abu Dhabi-based Mubadala Oil and Gas
as the preferred bidders for two offshore
oil blocks within Turkmenistan's portion
of the Caspian Sea.
It also reported that Turkmenistan
expected to secure a loan from China to
develop the lucrative South Iolotan gas
deposit, the second round of financing for
a project contracted out to Chinese state
oil and gas firm CNPC and other Asian
Ex-Soviet Turkmenistan is looking to
diversify energy sales from its
traditional market, Russia, and is
courting investors from the West, China
and other Asian countries keen for a share
of gas to be pumped from the world's
"President Kurbanguly Berdymukhamedov gave
the order to the relevant sector leaders
to hold productive negotiations with the
State Development Bank of China for the
receipt of a favourable loan of $4.1
billion," state television reported.
A source in the government, speaking on
condition of anonymity, told Reuters the
credit was required for the second phase
of South Iolotan, a deposit that
Turkmenistan estimates could contain up to
16 trillion cubic metres (tcm) of gas.
British firm Gaffney, Cline and Associates
audited the field in 2008 and said at the
time it contained between 4 and 14 tcm.
The first pipeline between gas-rich
central Asia and energy-hungry China
opened in 2009 and the expanded link
should be able to carry up to 40 bcm of
gas a year to China by 2012-13, if enough
gas is pumped out of the ground to fill
the multi-billion dollar pipelines.
"There's obviously a supply risk involved
in that and one way that they can mitigate
the supply risk for this pipeline is by
ensuring that the investment goes into the
upstream project," Ian Thom, head of
Caspian energy research at Wood Mackenzie
in Edinburgh said.
"They can't build the pipeline and then
not have the gas. This to me just looks
like another step in China's penetration
into the Central Asia energy sphere."
Chevron had earlier held talks about its
possible participation in developing the
South Iolotan field, a company official
said in November.
Its selection among the four companies to
drill blocks 9 and 20 in the Caspian Sea
marks a step forward for U.S. companies in
the country, which had to date been unable
to secure licences. Richard Morningstar,
Washington's energy envoy for the Eurasian
region, said during a visit to Ashgabat on
Aug. 3 that U.S. companies had made "a lot
of progress" with offshore projects in
The same government source told Reuters
that ConocoPhillips and Mubadala had bid
together for access to the Caspian. The
two companies are already working on an
offshore oil joint venture in Kazakhstan's
portion of the sea.
State television, while naming the
companies, revealed neither the size of
the blocks nor the investment involved.
The same television report also cited an
order from President Berdymukhamedov to
conclude a preliminary gas supply contract
with Pakistan and India by the end of this
The government source said India and
Pakistan had expressed interest in buying
up to 70 billion cubic metres of Turkmen
gas annually via an ambitious trans-Afghan
pipeline, known as TAPI after the four
countries through which it would pass.
"This pipeline, at a cost of $3.3 billion,
could bring peace and stability to
Afghanistan, as well as jobs and hard
currency," the Turkmen government source
He said gas could be drawn both from South
Iolotan and the existing Dovletabad field.
The planned pipeline would run for nearly
2,000 km (1,250 miles), including 735 km
across Afghanistan and another 800 km