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    Interest in Turkmen Natural Gas Heats Up

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Summary

Possible export routes for Turkmenistan's natural gas export towards the west and the south.

by: Dalga Khatinoglu

Posted in:

Top Stories, , Security of Supply, Trans-Anatolian Gas Pipeline (TANAP) , Trans-Caspian Pipeline, News By Country, Turkmenistan, Caspian Focus

Interest in Turkmen Natural Gas Heats Up

November has been a busy month for Turkmen officials, while crucial negotiations regarding the realization of a huge gas pipeline towards the South is scheduled to be carried out during the next days.

In recent weeks, Ashgabat hosted top Iranian and Turkish officials. Iran announced that Turkmenistan promised to increase gas delivery to Iran by 5 million cubic meters per day (mcm/d) in the winter to reach 30 mcm/d. On the other hand, Turkish President Recep Tayyip Erdogan visited Ashgabat in early November to encourage Turkmen government to consider gas delivering to the West.

Erdogan said that Trans Anatolian Pipeline (TANAP), which is a part of the Southern Gas Corridor and is implemented by Turkey and Azerbaijan, could also supply Turkmen gas to Europe.

The same proposal came from Azerbaijan during an international oil and gas exhibition and conference, which was held in Turkmenistan’s capital of Ashgabat from November 18th to 20th.

The head of Azerbaijan’s state energy company SOCAR, Rovnag Abdullayev, said that Baku “is ready to provide necessary infrastructure, a diversified system of oil and gas pipelines and other opportunities for implementation of projects in the oil and gas sector of Turkmenistan.”

Abdullayev didn’t mention Trans Caspian Pipeline (TCP) directly, but pro-government media outlets covered his statements comprehensively in a way which implied Azerbaijan’s readiness to help the construction of the 300-km gas pipeline under the Caspian Sea for transferring Turkmen gas to the coast of Azerbaijan.

Russia is against the construction of TCP seriously arguing that building pipelines in the Caspian Sea will damage the environment. However, in Azerbaijan's section Caspian Sea two 110 km long underwater pipelines have been built in order to transport natural gas and condensates from its offshore facilities like the Shah Deniz gas field to the coastal gas terminal, without raising the Russia’s environmental concerns. It seems Russia, in fact, doesn’t  want to see Turkmenistan’s huge gas reserves as a rival for its monopoly in European gas market.

Turkmenistan, which has the fourth largest gas reserves in the world (After Iran, Russia and Qatar), is one of the most prospective suppliers of gas to European market. And the most perspective route is the Trans-Caspian gas pipeline which will allow the transport of Turkmenistan’s huge resources through the Southern Gas Corridor.

It’s projected some 16 billion cubic meters of gas per annum (bcma) of Azerbaijan’s Shah Deniz Stage 2 gas field be delivered to Turkey (6 bcma) and Europe (10 bcma) through TANAP and Trans Adriatic Pipeline (TAP) by 2019. However, Both Azerbaijan and Turkey, alongside Europe, are keen to see Turkmen gas go this route.

Responding to Natural Gas Europe’s question about the possibility of providing Azerbaijani infrastructure to Turkmen gas for deliveries westward, the chief of  SOCAR’s Investments Department Vagif Aliyev said that “this issue, first of all, depends on Turkmenistan, because it is the seller. Ashgabad should make up the decision whether it wants to export its gas to the West or not. If the buyer and seller solve the commercial issues, then use of the existing Azerbaijani infrastructure is the subject of talks.”

He also added that the infrastructure must serve the commercial interests of the shareholders of the pipelines (TANAP and TAP) and it will be also be opened to the other gas suppliers if the gas transportation system has free capacity.

SOCAR has 58% share in TANAP, 20% in TAP and 10% in the South Caucasus Pipeline (also known as: Baku–Tbilisi–Erzurum Pipeline).

Meanwhile, statements of Rovnag Abdullayev, President of State Oil Company of Azerbaijan (SOCAR), at the Turkmenistan Oil & Gas-2014 conference in Ashgabat on November 18 came on the same day that Turkmenistan and the Italian energy group Eni signed a memorandum of mutual understanding to explore and extract hydrocarbons on the blocs 19 and 20 in the Turkmenistan sector of the Caspian Sea.

At the ceremony of signing the MoU, Turkmenistan President Gurbanguly Berdymohammadov said that “the experts evaluate resources of the bloc at over 500 million tons of oil and over 600 billion cubic meters of natural gas.”

“The blocs 19 and 20 are located in the deeper sections of the Turkmen sector of the Caspian Sea and Azerbaijan has all required infrastructure – from exploration to construction of deep-water platforms and upper facilities for the future platforms,” a source from SOCAR told Natural Gas Europe anonymously.

It is clear that such developments first of all concern Russia, as Europe is trying to find alternative gas supplies.

Earlier, Russian Foreign Minister Sergei Lavrov said the Trans Caspian gas pipeline project falls into the category of projects affecting the interests of countries not taking part in the negotiations, that is, Russia.

Beside these projects, Turkmenistan is considering the gas delivery to be a very crucial pipeline projected to pass through Afghanistan towards Pakistan and India (TAPI) with 90 mcm/d gas delivery capacity.

TAPI will carry gas from Turkmenistan's Galkynysh field, the world’s third big gas field with the capacity of producing 100 bcma by 2020s.

The prospect of this gas transport project will be discussed at the 19th Steering Committee meeting of TAPI pipeline project in Turkmenistan on November 20th, in Turkmenistan, where India will be represented by Oil Minister Dharmendra Pradhan.

Turkmenistan has already exported gas to China. Should the $10-billion TAPI project be commissioned, this country still will have extra gas to deliver towards the West by full completion of Galkynysh project.

The basic document for the promotion of TAPI is the Ashgabat interstate agreement signed between the participating states in 2010 on starting the practical implementation of this project.

The design capacity of TAPI will be up to 33 billion cubic meters of gas per year, while the expected lifetime is 30 years.

The total length of TAPI will reach 1,735 kilometers. Some 200 km of the pipeline will run through Turkmenistan, 735 km through Afghanistan, 800 km through Pakistan to the settlement of Fazilka, located on the border with India.

On November 19th, the sides involved in the TAPI project held meetings at the expert-level in Ashgabat, exploring the renovation of the feasibility study, the registration of TAPI Ltd and the selection of companies that claim to leadership in the consortium.

It was earlier reported that Turkmengaz State Concern, Afghan Gas Corporation, Pakistan's Inter State Gas Systems (Private) Limited and India’s GAIL (India) Limited established an operating company for the TAPI pipeline. The company will construct the TAPI pipeline and will be engaged in the operation of this pipeline.

Turkmen President Gurbanguly Berdimuhammadov said at the meeting of the Council of Elders in October that it is planned to start the construction of TAPI in 2015.