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24.05.11 11:50

On the Shore of Gas River

It is for the second consecutive year that Turkmenistan hosts the International Gas Congress and Exhibition of Gas Industry. The decision to hold annually such international forums, and it should be recalled that the first forum was held in April last year, has been motivated by an increasing desire of representatives of the global business community to enhance cooperation with Turkmenistan in the energy sector. And this is quite understandable. The country is rightfully recognized as one of the leading energy powers in the world. It gradually implements large-scale projects aimed at increasing exports of energy that is in demand at the world markets.

The year of the twentieth anniversary of independence of Turkmenistan is full of events associated with the recognition of Turkmenistan as an active player in the international energy market. In February, Ashgabat hosted an international conference on environmental issues in relation to construction of pipelines across the Caspian Sea, which laid the foundation for further work on the Trans-Caspian gas pipeline project. In March, the first International Conference "Turkmenistan Oil & Gas Show 2011" was held in the biggest business center of Southeast Asia - Singapore, which is evidence of the strengthened position of Turkmenistan in the Asian energy market. In November, Ashgabat will host the sixteenth international exhibition and scientific-practical conference "Oil and Gas of Turkmenistan-2011".

Huge gas reserves in discovered deposits put Turkmenistan in the fourth place in the list of the biggest "gas" powers. Natural gas reserves at Southern Yoloten-Osman field alone, which is still being explored by the Turkmen geologists, are estimated to have over 21 trillion cubic meters of gas. Moreover, Turkmenistan has substantial reserves of oil. Oil extraction, transportation and processing also provide opportunities for establishing mutually beneficial partnerships with leading foreign companies. In the anniversary year of independence, the country's energy sector enterprises continue to expand its industrial-economic potential. In the first quarter, the growth rate of oil and gas condensate production amounted to 106.5 percent compared to the same period of 2010. Production of natural and associated gas for this period grew by 41.3 percent. Notable growth is reported in natural gas exports, which increased by 87.9 percent. This high growth was achieved mainly by increasing the supply of gas to China and Iran, while Russia's Gazprom imports of Turkmen gas remained the same as last year.

The fast rates of natural gas and oil production is ensured by efficient operation of the stock of existing wells and by drilling new ones. For example, drilling of new wells in 3 months exceeded the target by 4.2 percent.

The high output growth in the first quarter was also demonstrated by the Turkmenbashi complex of oil refineries and the Seyidy refinery. In particular, production of gasoline of all grades amounted to 106.2 percent, diesel fuel - 109,3 percent, lubricating oil - 138.7 per cent. Production of liquefied gas exceeded the planned target of the first quarter by 17.2 percent.

It is important that the growing volume of production and sale of products turned out by the oil and gas industry, much of which are exported, provide for a noticeable increase in revenues received by Turkmenistan. In the first quarter, the gross profit from sales of natural and liquefied gas, petroleum products, as well as polypropylene increased 2,5 times to more than US $ 1,7 billion.

Today, the oil and gas industry of Turkmenistan faces the challenge of further expanding the production of hydrocarbons, high quality petrochemicals and building export capacity of the country. In this regard, Turkmenistan places an emphasis on modernization of production capacities, introduction of advanced technologies and high-efficiency equipment, increasing capacities of transport infrastructure.

To meet these challenges, the enterprises of the fuel and energy sector implement a number of large investment projects of international significance. One such project is the first phase of rapid industrial development of Southern Yoloten-Osman field located in the eastern part of the country. It is being developed by the State Concern Turkmengaz. The concern signed service contracts in December 2009 with Gulf Oil & Gas Fze, Petrofac International LLC (UAE), CNPC Chuanging Drilling Engineering Company (PRC) and a consortium of LG Internatinal Corp and Hyudai Engineering (South Korea) companies for a total of US $ 9.7 billion to accelerate the pace of work and attract new foreign technologies and equipment.

Turkmenistan raises funds from both internal and external sources to finance the work on this project. In 2009, Turkmengas signed a loan agreement worth U.S. $ 4 billion with the China Development Bank, which was used for these purposes. In April 2011, the same partners signed a new credit agreement for US $ 4.1 billion. In the same month, there was signed an agreement on multilateral cooperation between SC Turkmengaz, PetroChina and China Development Bank, which provides for repayment guarantees through deliveries of Turkmen natural gas.

Today, extensive work is being carried out at Southern Yoloten-Osman field for integrated development of the field. By the end of 2012, there will be drilled hundreds of wells, built 3 large plants for desulfurization of gas. At the first stage of operation of the field, it is planned to extract and produce 30 billion cubic meters of purified commercial gas a year, and in the future, if necessary, this volume can be doubled. At the same time, exports of gas will be carried out both in the eastern and European directions.

The state concerns Turkmengaz and Turkmenneftegazstroy are currently building the East - West gas pipeline with the length of almost 1000 kilometers. In the area near the gas compressor station Belek, welding of large diameter pipes is carried out, dozens of kilometers of which have already been laid and connected along the route. Geotechnical and topographical work in the 112-kilometer long segment Belek - Gumdag has been completed. The design work of the linear part of the pipeline continues. The commissioning of the East - West pipeline in 2012 will make it possible to establish a unified gas transportation network in the country and to send natural gas to international pipelines, both existing and planned in the region.

Today, Turkmenistan is gradually implementing an energy strategy aimed at increasing exports of natural gas and diversifying its supply routes to the major world markets with growing energy demand. Along with the traditional export of natural gas to Russia, Turkmenistan is expanding its presence in the fuel market of the Asian region owing to increased supplies through the Trans-Asian gas pipeline to China, and through the second pipeline Dovletabad - Sarahs - Hangeran to Iran.With a powerful resource base of natural gas, Turkmenistan never stops at what has been achieved and confidently makes it way to all the new international markets. This is evidenced by the idea of construction of Turkmenistan - Afghanistan - Pakistan - India (TAPI) gas pipeline with the capacity of 33 billion cubic meters a year. In December 2010, a framework agreement on the gas pipeline and an intergovernmental agreement on TAPI project were signed in Ashgabat during the summit of the project participants. In the first half of 2011, it is planned to prepare and sign the remaining documents for pipeline construction.

A draft agreement for the sale of Turkmen gas is currently being developed at the level of experts of the technical working group and TAPI project steering committee, as well as representatives from the Asian Development Bank. Conditions of transit and ensuring safety of the future pipeline are being discussed. In addition, the issue of participation of foreign companies with technical capabilities, advanced technologies and practical experience in laying pipelines in the Asian region is being considered. Their participation will ensure the high speed of construction of the pipeline, much of which will be laid through Afghanistan, Pakistan and India with complex climatic conditions.

Energy supplies to Europe is another promising area of export of Turkmen gas. In this context, the possibility of implementing the project on construction of the Trans-Caspian gas pipeline is being actively discussed. The meeting between President Gurbanguly Berdimuhamedov and President of the European Commission Jose Manuel Barroso in Ashgabat in January this year gave a powerful impetus to the further development of energy partnership with the European countries. Having confirmed the EU interest in establishing close energy cooperation with Turkmenistan and expressing support for the position of Ashgabat on the construction of the Trans-Caspian gas pipeline, the European Commission President praised Turkmenistan as a reliable exporter of gas and a key player in the global energy arena.

Consistently implementing major projects of international importance in the oil and gas sector, Turkmenistan demonstrates a responsible approach to international cooperation in the energy sector, and, to this end, has put forward specific initiatives, including at the UN, on establishment of a multi-vector system of transportation of hydrocarbons and establishment of a reliable mechanism to ensure safe transit of energy to the world markets.

Oleg LUKIN,

"Turkmenistan" magazine

 

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