Turkmenistan: Market Diversification

Via Bloomberg, a report that Turkmenistan’s willingness to ship natural gas to European partners if they build a pipeline across the Caspian Sea to transport fuel westward.  As the article notes:

“…We’ll be happy to work with European partners, should they choose to build a pipeline to our border,” Yagshigeldy Kakaev, director of state-run gas company Turkmengaz, said today at a conference in Bucharest. “Diversification for us means diversification of markets, but we won’t compete for a market at any cost.”

Landlocked Turkmenistan, holder of the world’s fourth- largest gas reserves, may become a key supplier to Europe, which depends on Russian export monopoly OAO Gazprom for a quarter of its needs. The European Union has made security of gas supply through different sources of the fuel a key policy objective.

Gas importers are competing for supplies from Turkmenistan, Central Asia’s largest producer. A pipeline to China is nearly complete and a link to India through Pakistan and Afghanistan is planned. Its main export route via Russia has not flowed since an explosion in April, costing the country as much as $1 billion a month in revenue. The pipe was repaired and the two sides are negotiating a new gas price.

New discoveries in the Central Asian state and a fresh audit of gas deposits meant Turkmenistan’s proved reserves tripled last year to 7.94 trillion cubic meters, surpassing Saudi Arabia’s, BP Plc data show.

Turkmenistan now produces 40 billion cubic meters of gas a year, Kakaev said. Production peaked in 1989 at 73.2 billion cubic meters, BP’s Statistical Review of World Energy shows. It dropped as low as 11 billion after the collapse of the Soviet Union in the 1990s.

Territorial Disputes

One bar to a trans-Caspian pipeline from Turkmenistan to Azerbaijan and on into Europe through projects such as the OMV AG-led Nabucco pipeline is the disputed status of the Caspian Sea, an area rich in oil and gas. Russia, Kazakhstan, Turkmenistan, Iran and Azerbaijan can’t agree on the water boundaries between their states.

“We have very good relations with Azerbaijan. Negotiations are being held between working groups set up by the foreign ministries of the two countries,” Kakaev said. “We hope they will find a solution soon. We are disappointed that there isn’t one yet.”

Kakaev said his country had sufficient gas to supply current pipelines to Russia and China as well as future links. Exports to China, which has built its own pipeline to ship as much as 40 billion cubic meters a year from Turkmenistan, are scheduled to begin later this year.

“Now our priority project is the pipeline to Afghanistan- Pakistan-India,” Kakaev said.

Turkmenistan may be losing as much as $1 billion a month in gas sales to Gazprom, Julian Lee, a senior energy analyst at the London-based Centre for Global Energy Studies, said last month.”

This entry was posted on Sunday, October 4th, 2009 at 9:32 am and is filed under Gazprom, Russia, Turkey, Turkmengas, Turkmenistan.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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