According to Business Monitor International (BMI), Turkmenistan is driving forward its natural gas developments to supply China. The country, which has the fifth largest proven natural gas reserves in the world, according to the EIA, is now shipping gas at an annualised rate of 35.0 billion m3 to China. In addition to smaller volume exports to Russia, Iran and other central Asian countries, BMI estimates that Turkmenistan exported 45.1 billion m3 of gas in 2014.
Much of the increase over 2014 was down to the development of China National Petroleum Corp’s (CNPC) Amu Darya Natural Gas Project. According to CNPC approximately 93% of the new imports into China over 2014 and early 2015 have come from the Amu Darya project.
The Galkynysh gas field, which began production in 2013, is expected to be the main driver of export growth to 2020, with new phases of the project due to add approximately 20.0 billion m3 of gas over the coming years. The expected completion of the Line D pipeline to China will enable gas exports to increase by approximately 5.0 billion m3 a year to 2020. Turkmengaz and CNPC continue on their plan to increase gas exports to China to 40.0 billion m3 in 2015 and 65.0 billion m3 by 2020.
BMI believes that these targets are achievable and forecast total Turkmenistan gas exports to reach 49.0 billion m3 in 2015 and 75.4 billion m3 by 2020. However, while we expect a substantial increase in exports to China, gas sent to Iran and Russia is expected to decline. Iran is currently undergoing a major gas expansion programme and has stated it will be able to produce sufficient gas from March 2015 not to require Turkmen gas imports. Russia considerably reduced gas imports from Turkmenistan following the financial crisis in 2009, and trade has been trending down since then falling from near 40.0 billion m3 in 2008 to under 10.0 billion m3 in 2013.
Dependence on China as a gas export market is therefore due to increase. If Turkmenistan reaches its planned export target to China of 40.0 billion m3 in 2015 and 65.0 billion m3 by 2020, BMI forecasts this to represent 81.6% and 86.2% of total gas exports, respectively. In 2013, China imported approximately 60.0% of Turkmenistan’s imported gas.
BMI therefore sees risks to long term growth potential outside of Turkmenistan’s domestic market, particularly with China working to diversify its gas imports through major deals with Russia over 2014. BMI holds the view that potential gas exports to India, via the proposed Turkmenistan-Afghanistan-Pakistan-Indian (TAPI) pipeline, and exports to Europe via the Caspian Sea, remain marred by political challenges preventing their realization over the BMI forecast period to 2024.
Adapted from a BMI report by Emma McAleavey.
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