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China, Turkmenistan expand gas coop

18 September 2013 17:33 (UTC+04:00)
China, Turkmenistan expand gas coop

By Aynur Jafarova

Important official figure of giant China - President Xi Jinping made a Central Asia tour on September 3-13 which has historic significance for the region, in particular for Turkmenistan.

This visit is an indicator of that the new Chinese leadership intends to expand cooperation with Turkmenistan, especially in the gas field.

Turkmenistan, which is rich with hydrocarbon reserves, is a nice source for China. Turkmenistan is one of the key players on the energy market in the resource-rich Caspian region. The Central Asian state has the world's fourth largest natural gas reserves after Russia, Iran and Qatar. It produces about 70-80 billion cubic meters of gas a year.

According to forecasts, China will be the world leader in gas consumption soon. The highest growth in gas consumption in the next 20 years is expected to come from this country.

While in Turkmenistan, Jinping attended the opening of the giant Galkynysh gas field, the second largest deposit in the world, with reserves of 26.2 trillion cubic meters of gas.

Turkmengas State Concern signed agreements with the State Development Bank of China on cooperation on financing the second phase of development of this field and with the China National Petroleum Corporation on purchase and sale of 25 billion cubic meters of natural gas.

According to experts, the expansion of Turkmenistan's gas cooperation with China can be viewed in two ways - on one hand, it will bring significant cash receipts to Turkmenistan, on the other hand - it will put Ashgabat in a dependent position of Beijing.

General Director of the Russian Institute of National Energy Sergei Pravosudov believes that China will consume all the volumes of gas "that will appear next to it, including and especially the Turkmen gas - it is clear, because the contracts have already been signed."

According to him, Turkmenistan will unlikely be looking for other opportunities to export gas in the foreseeable future, as the two discussed alternative routes for Turkmen gas - to Europe and India -- remain abstract and real steps have not been taken to realize them.

The expert claims that currently Turkmenistan sells its gas to China, Russia and Iran, whilst this country becomes dependent on China by increasing gas exports to this country.

"Ashgabat becomes strongly dependent on Beijing. China does not only buy gas, but also invests in its production, the construction of the gas transmission system, and grants loans to Turkmenistan," Pravosudov said.

However, the energy strategy carried out by Turkmenistan aims to increase the production volume and export of natural gas, as well as to diversify the routes of supply to major world markets.

Senior Energy Analyst at the Center for Global Energy Studies Julian Lee believes that Turkmenistan will continue seeking other gas export options for balancing the growing dependence on China.

According to Lee, China could, conceivably, consume all of the gas that Turkmenistan is able to export, but Turkmenistan is unlikely to be comfortable with that situation.

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