Turkmenistan set to start building new gas pipeline needed to boost exports to Russia, Europe

Turkmens set to start work on new gas pipeline

ASHGABAT, Turkmenistan — Energy-rich Turkmenistan will start later this month building a pipeline linking its natural gas-rich fields in the east to the Caspian Sea coast in an effort to increase its export potential, a state newspaper said Monday.

Rebuffing numerous offers by Russian companies to construct the 1,000-kilometer route, President Gurbanguli Berdymukhamedov said work on the pipeline will be carried out by Turkmen state companies, Neutral Turkmenistan reported.

Russia and Europe are both vying for a share in Turkmenistan’s gas riches, but transporting those resources to either market will require a new route traversing the Central Asian nation to reach the starting points of proposed export pipelines from the Caspian coast.

Neutral Turkmenistan said building the East-West pipeline is “a practical step in the implementation of large-scale plans for Turkmenistan to diversify its energy export routes to world markets.”

The newspaper said the pipeline will have an annual capacity of 30 billion cubic meters. Deliveries through the route are expected to start in June 2015.

A major contributor to the East-West pipeline will be the vast Southern Yolotan-Osman field, located near Afghanistan’s western border, the newspaper said. Independent auditors Gaffney, Cline and Associates said earlier this year that the field may hold up to 16 trillion cubic meters of gas, making it one of the largest in the world. Output at the field could reach 30 billion cubic meters of gas annually within three to five years, the auditors said.

The United States and European Union are seeking to channel Central Asian gas into the planned Nabucco pipeline, which would run from the Caspian Sea to Europe, circumventing Russia.

Ensuring Nabucco’s viability would likely require Turkmen gas carried through a subsea pipeline across the Caspian Sea. But delimitation of the Caspian Sea remains a point of contention between the five nations that surround it and could thwart prospects for Nabucco.

Meanwhile, Moscow has pinned its hope of cornering the Turkmen gas market on the creation of a new pipeline from Turkmenistan’s Caspian coast, running through Kazakhstan and linking up with Russian state company Gazprom’s grid. The presidents of Russia, Kazakhstan and Turkmenistan signed off on an agreement to build the pipeline in May 2007, but no real progress has been made on the project so far.

Energy ties between Russia and Turkmenistan were damaged in April 2009, when a pipeline explosion blamed on Moscow by Turkmen authorities interrupted supplies. After an almost eight-month standoff, Turkmenistan began to supply 30 billion cubic meters of gas annually — a substantial reduction from the 50 billion cubic meters that Russia was buying before the blast.

China also made a dramatic entry into the competition for Central Asian gas last year, when a new pipeline joining Turkmenistan and China began operating in December. Turkmen gas deliveries to China through the pipeline are expected to increase annually until reaching 40 billion cubic meters in 2015.