Page 6 - AsianOil Week 34 2021

AsianOil EAST ASIA AsianOil

China finally shows interest

in more Turkmen gas

PIPELINES & CHINA’S state-owned CNPC has reportedly
TRANSPORT agreed to expand purchases of gas from Turk-
menistan, after years of supplies remaining
stagnant.
The company will receive up to 51bn cubic
metres of gas over the course of three years in
exchange for helping Turkmenistan increase
production at the giant Galkynysh field, Reu-
ters reported on August 25 citing a source and
a local media report. CNPC will drill three wells
at the field over the next 30 months, each flowing
around 3mn cubic metres per day, according to
the news agency.
In June, local state-run news outlet Business Uzbekistan, Tajikistan and then Kyrgyzstan
Turkmenistan reported that CNPC had won a before entering China.
tender to sink the wells under a service contract The new deal on extra supplies is unlikely to
it has with the Turkmen government. have any impact on whether the fourth string
Turkmenistan is already one of China’s big- goes ahead. Kazakhstan has had difficulty
gest gas suppliers, taking some 29 bcm of gas sending as much gas to China as it would like,
from the Central Asian state last year, down 14% while Uzbekistan is actively looking to reduce
from the level in 2019. Beijing cut some of its gas shipments to China over the coming years, in
imports after the coronavirus (COVID-19) virus order to use more gas at home for power gener-
broke out, sapping Chinese gas demand. ation, petrochemicals and other industries. Any
Most of this gas comes from Galkynsysh and increase in Turkmen volumes is therefore likely
other fields controlled by Turkmen state gas firm to be offset by reductions from other Central
Turkmengaz. CNPC has played a crucial role in Asian suppliers.
developing the project but only as a service con- Turkmenistan is also seeking to access other
tractor rather than an operator. But some sup- gas markets through two more ambitious pipe-
plies also come from the Bagtyarlyk block, which line projects, although neither has made much
is operated by CNPC under a production-shar- tangible progress in years. Ashgabat wants to lay
ing contract (PSC). a pipeline under the Caspian Sea, which would
The gas is sent to China via the Central Asia- enable it to feed gas into the Southern Gas Cor-
China (CAC) gas pipeline system, which consists ridor (SGC) system that stretches from Azerbai-
of three strings with a combined throughput jan to Southeast Europe. But the pipeline seems
capacity of 55 bcm per year. The first string came unlikely to materialise, given opposition from
online in 2010, providing Turkmenistan access Caspian littoral states Iran and Russia, and ques-
to a major gas market other than Russia for the tionable commercial logic.
first time. The second project is of course the long-dis-
In addition to Turkmen gas, CAC also car- cussed Turkmenistan-Afghanistan-Pakistan-In-
ries supplies from Kazakhstan and Uzbekistan, dia (TAPI) pipeline, which would carry up to
though in far smaller quantities. 33 bcm per year of Turkmen gas to south Asia.
The project has never really got off the ground
Implications because of difficulties obtaining funding,
Turkmenistan has been pushing to send more although Turkmenistan claims to have com-
gas to China for many years, but Beijing has pleted some of its sections in its territory.
been reluctant to increase shipments, wary of Concerns about TAPI have largely centred
relying too much on a single supplier. Besides the on its proposed route through restive Afghani-
political risk that this would entail, China would stan. The Taliban, which has seized the country
rather buy more flexible LNG volumes rather in recent months, has said in the past it supports
than commit to a necessarily long-term contract the pipeline. But Afghanistan’s renewed isolation
for extra Turkmen gas. under the group’s rule is likely to seal TAPI’s fate,
For years, there has been an on-again, off- as it will be even harder for the project to secure
again plan to add a fourth 30 bcm per year financing.
string to the CAC system, which would under- Furthermore, India and Pakistan seem to
pin a growth in Turkmen exports. Unlike the have little faith in TAPI being realised. Both are
other three lines, which run from Turkmen- expanding their regasification capacity, viewing
istan through Uzbekistan and Kazakhstan, LNG imports as a more viable option for their
this one will pass from Turkmenistan through energy needs.™

P6 www. NEWSBASE .com Week 34 26•August•2021