The gas industry is one of the leading sectors of the Turkmen national economy and its "locomotive". Established over 40 years ago it has received accelerated growth in a short historical time and now makes its worthy contribution to the economies of not only Turkmenistan but other CIS countries as well, those that transit and consume Turkmen gas. Since 1999, Turkmenistan has been annually increasing production and exports of this most valuable energy raw material. In the recent years, powerful gas extracting and processing complexes have sprung up, new fields have been found and gas transporting enterprises have been constructed. The country has been completely gasified and the population gets "blue fuel" supplies free of charge.
The figures can show the following picture of underground reserves development. 149 gas and gas condensate deposits have been discovered in Turkmenistan. Their reserves make up 4970768 million cub m, including 136 onshore fields and 10 in the Caspian shelf. 54 fields with reserves over 2.6 billion cub m are under exploitation, 11 deposits have been prepared for exploitation, 73 pools are under exploration and 11 fields are in conservation.
"Turkmengaz", "Turkmenneft" and "Turkmengeologiya" State Concerns are engaged in gas extraction in the country. "Turkmengaz" State Concern produces over 80% of the total gas production. To increase gas reserves, the exploration drilling is carried out at the accelerated rates with the help of up-to-date drilling rigs able to ensure penetration of deep wells (up to 6,000 m), geophysical and other equipment. Active application of the latest technologies is under way. Despite considerable amount of exploration works, the territory of the country has not been surveyed completely yet. The average density of seismic profiles makes up 0.39 km per one square kilometer in Turkmenistan and the exploration drilling density 20.5 m per 1 sq km. As a matter of fact, only the upper layers of the oil and gas bearing deposits have been surveyed. Considering that the explored reserves and cumulative extraction make up only about 25% of hydrocarbon resources, continuation of prospecting works opens wide opportunities to transfer estimated and promising resources to the commercial reserves category that will make it possible to reach the level of hydrocarbons production set by the Strategy of Turkmenistan's oil and gas complex development until 2020.
Eastern Turkmenistan, occupying the area of 180 thousand sq m, is the main gas producing region in the country. Over 1000 exploration wells were drilled. It makes up almost one third of the total drilling conducted in Turkmenistan. Over 60 gas and gas condensate fields have been discovered, including the giant Dowletabat pool with estimated 4.5 trillion cub m of gas and the big Malay, Shatlyk, Ojak and Samantepe and other deposits, in the region. The forecasts of geologists on the presence of the biggest beds of hydrocarbons on the vast area in the south-east of the country in Mary province have been confirmed. It is anticipated this region will become the main resource basis for the development of the gas industry in the nearest 15-25 years.
Until recently, the gas extraction in western Turkmenistan was limited to associated gas extracted during the development of oil and oil and gas fields. Now, natural gas extraction has started here. "Blue fuel" extraction in western Turkmenistan, as well as in the country as a whole, exceeds the domestic consumption many times. Gas surplus, after its corresponding treatment, is exported to the Islamic Republic of Iran and to the north through Kazakhstan.
In the recent decades, oil and gas has been explored in the Turkmen sector of the Caspian Sea, almost all area of which represents interest from the point of view of its hydrocarbon reserves. As a result of conducted geological and exploration works, a total of 161 oil and gas fields, including 30 oil and gas and 131 gas and gas condensate ones, have been discovered on the mainland and in the sea. Moreover, drilling enterprises of "Turkmengeologiya" State Concern carry out a lot of work in Turkmenistan's other promising regions with accumulated large reserves of natural gas. It is necessary to point out that hydrocarbons extracted in Turkmenistan possess high commodity properties: they are practically devoid of aggressive chemical elements sulfur, carbon dioxide and hydrosulfide gases.
Turkmenistan annually upgrades the oil processing industry's capacity represented now by Turkmenbashi Oil Refineries Complex and Seidi Oil Refinery. Deep oil and natural gas processing with a liquefied gas being one of the products is among the first priority tasks.
Nearly 2.0 million tons of liquefied gas has been produced in last five years by Turkmenbashi Complex of Oil Refineries and the Naip gas processing complex. In connection with the grown world demand for liquefied gas, its exports in 2006 have increased almost by 400 thousand tons. The specific gravity of exported liquefied gas in the production structure has been steadily growing from 4.4% in 1997 to 96.7% in 2006. This year, the production capacity of liquefied gas output are to grow by 94,000 tons this year alone, and its production will continue to grow up to 2 million tons in 2020. For these purposes, it is planned to construct over 20 plants on the fields with high content of propane-butane fractions in the east of the country.
The Turkmen liquefied gas is exported to Iran and Afghanistan and a number of other countries in the region. In the future, with upgrading of the production capacity, it will be exported to Pakistan, China, South Korea and Japan. Currently, liquefied gas is delivered to consumers by the railway transport. The projected considerable increase in liquefied gas output and insufficient consuming capacity of the nearest local markets require the use of alternative export routes, access to the main regions of the world liquefied gas markets, and creation of the reliable high capacity sea transportation system. In this context, construction of the terminal at Kiyanly port to store and ship exported liquefied gas has been started. Commissioning of this project in February 2008 will enable Turkmenistan to export liquefied gas to the sea ports of neighboring Caspian states and further to Europe.
The existing gas extraction and treatment capacities are capable of ensuring commodity gas supplies up to 220 million cub m a day. Work on creation of additional capacities on the new fields is going on. A number of projects on development and reconstruction of existing networks of gas transportation in volumes specified in the existing export contracts is being realized.
Turkmenistan's gas transporting system operates 8 thousand km long pipelines in one line calculation. Turkmen gas is exported in two directions: to Ukraine and Russia in the north and to Iran in the south. By 2010, natural fuel exports will grow more than twice. Most of exports, as before, will flow in the European direction.
In 2005, Turkmenistan exported about 45.5 billion cub m of gas to the Russian Federation, Ukraine and the Islamic Republic of Iran. Turkmenistan and the People's Republic of China signed an agreement on construction of a gas pipeline. Under the agreement, China intends to buy 30 billion cub m of blue fuel' annually during 30 years. The Turkmen-Iranian agreement on increasing Turkmen natural gas supplies to Iran up to 14 billion cub m in 2007 was concluded. The Turkmenistan-Afghanistan-Pakistan gas pipeline project is one of the most promising. The three countries confirmed their decision to lay the pipeline by signing the interstate Agreement in 2002. The pipeline throughput will make up 33 billion cub m of gas per year. In April 2006, the Ministry of Oil and Gas Industry and Mineral Resources of Turkmenistan and the representative delegation of Gazprom Open Joint Stock Company negotiated in Ashgabat the annual supplies of 50 billion cub m of Turkmen gas to the Russian Federation within next 3 years. Adhering to the principle of multiple gas deliveries Turkmenistan considers other gas supply routes to Turkey and further to Europe. Demonstrating flexibility in implementing projects, Turkmenistan is ready to supply gas at any point on its border, including the Caspian Sea coast, to all interested customers.
To realize the set plans it is necessary to increase the capacity of existing export trunks as well as to lay new routes providing outlets to new export markets. Turkmenistan has been successfully addressing this issue. By 2007, the Turkmen sections of the gas pipeline system leading to European countries will have been modernized. The project capital investments will make up US$ 730 million. The favorable geographical location in the centre of the Eurasian continent and abundance of the natural resource enable Turkmenistan to export raw materials to any part of the continent and make the country attractive to investors from all over the world.
At present, the projects on exploration, prospecting and development of hydrocarbon deposits cover the major volume of direct foreign investments in Turkmenistan's oil and gas complex. The use of international experience in applying advanced technologies in local conditions, rendering services and delivering equipment enables the industry to increase its productive effectiveness. The significant increase of investment in the national oil and gas complex is foreseen to achieve the planned indicators in hydrocarbons production and their export to foreign markets. In the period from 2005 to 2020 over US$ 60 billion is to be invested in development of the industry with over 40% being direct foreign investments under Production Sharing Agreements. The well-known foreign companies, as Argomar Oil Ltd, Middle East Petrol Farm, Petronas, British Petroleum, Vitol, Itochu, Som Petrol, BP Oil International, Dragon Oil, Maersk Oil and others successfully operate in the Turkmen market.
The subdivisions of the State Concerns, Turkmenneft, Turkmengaz and Turkmengeology, render the major volume of service in the oil and gas industry. The share of foreign companies does not exceed 10 percent. Relying on the establishment of the national service sector Turkmenistan is determined to collaborate with foreign companies in designing the technologies not yet applied by the Turkmen specialists.
Turkmenistan explores and develops the on-shore hydrocarbon deposits primarily by its own. Nevertheless, the foreign companies have a lot of opportunities to do business in Turkmenistan. The opportunities include delivery of modern equipment, technologies and services. Most of oil and gas equipment is not produced in Turkmenistan and the demand for it can be met through imports.
To achieve the planned oil and gas production level till 2020 the state concerns and corporations are planning to drill over 1,300 production and prospect wells.
The fleet of drilling rigs and well overhaul equipment is being modernized. The drilling technologies are being updated: the technologies of drilling large-size holes, horizontal drilling and some others are being applied in production. Within the next 4-5 years, Turkmenistan is expected to extract almost half of its total amount of oil and gas from deep horizons in Turkmenistan. Due to that there is a need in purchasing appropriate equipment and technologies ensuring the well structure reliability.
The prospects of Turkmenistan's oil and gas sector development in the nearest ten years are related to intensive development of the Caspian Sea's Turkmen shelf. According to the exploration data, the abundant hydrocarbon accumulations are concentrated in the depth between 2,000 and 7,000 meters. Estimated 12 million tons of oil and 6.2 trillion cub m of gas is more than half of petroleum reserves and about a quarter of natural gas reserves Turkmenistan is rich in. According to specialists, over 80 percent of hydrocarbon reserves occur in insufficiently explored oil and gas accumulation zones at a depth of over 3 km. The prospects for the discovery of new deposits are linked to the development of two large Middle Caspian and Southern Caspian oil and gas bearing basins.
Till 2020 Turkmenistan relies on the active participation of foreign investors in developing hydrocarbon resources in the Turkmen sector of the Caspian Sea. The government of Turkmenistan adopted the Program of licensing of the Caspian Turkmen sector, assigning 32 blocks for hydrocarbon exploration and production. Over 25 oil companies, including those from Europe, Russia and the United States, took a keen interest in the proposed blocks.
To attract foreign investments in the exploration of offshore deposits is a priority direction of Turkmenistan's cooperation with foreign companies. Besides, Turkmenistan is interested in using the latest technologies and up-to-date equipment in the offshore oil production. The task is to establish the national drilling fleet. Turkmenistan is considering the foreign companies' proposals on the placement of contracts for building drilling units, work boats and shore base.
The bulwark and priority of the national economy, the steadily developing national oil and gas complex has approached the 15th anniversary of independence with the great achievements. Turkmenistan has firmly established itself as a big energy producer, and upholds its high international status. The abundant reserves of hydrocarbon material hidden in Turkmenistan's depths continue to serve the young state's development and prosperity.
By the materials of the oil and gas production enterprises of Turkmenistan.