Energy-rich Turkmenistan seek $4.1 Bln loan from China to develop giant natural gas field

Turkmens seek $4.1 Bln loan from China

ASHGABAT, Turkmenistan — Energy-rich Turkmenistan is reaching out to China for a $4.1 billion loan to develop one of the world’s largest natural gas fields, state media reported Friday.

While signaling its growing reliance on economic support from China, the isolated Central Asian nation has also expressed a readiness to award concessions for oil and gas fields in the Caspian Sea to a range of U.S. companies.

“For the further financing of the project to develop the South Yolotan gas field, it is necessary to conduct intensive negotiations with China State Development Bank on extending a soft loan worth $4.1 billion,” President Gurbanguli Berdymukhamedov was quoted as telling a meeting of energy industry representatives at a meeting Thursday.

China already loaned Turkmenistan $3 billion last year for the development of the South Yolotan field near the Afghan border, which an independent British surveying company has said may be one of the five largest gas reserves in the world.

A landmark 1,800-kilometer (1,080-mile) pipeline leading from Turkmenistan, through Uzbekistan and Kazakhstan, to China began pumping natural gas in December, a coup for Beijing in its search for new sources of energy to fuel its burgeoning economy.

Turkmen gas deliveries to China through the pipeline are expected to hit around 6 billion cubic meters this year, with supplies increasing incrementally every year until they reach 40 billion cubic meters in 2015. That increase will rely in part on the success of effectively exploiting resources at South Yolotan.

Russia, which is buying around 10 billion cubic meters of gas from Turkmenistan this year, has long hoped to corner supplies from the fellow former Soviet republic. Western nations have also jealously eyed Central Asia’s gas riches and backed pipeline routes that would enable those energy resources to reach Europe.

China’s deep pockets and active energy diplomacy have allowed it to steal a march on its would-be rivals, however, and enabled it to claim the biggest prize Turkmenistan has on offer.

Turkmenistan’s apparent need for financial assistance will raise eyebrows as the government spends billions on a lavish tourist complex on its Caspian coast, which some critics have described as a frivolous white elephant.

At Thursday’s meeting, Berdymukhamedov instructed officials to consider proposals to develop offshore oil and gas fields in the Caspian Sea submitted by Chevron and ConocoPhillips. Among the other potential candidates he named were TX Oil Ltd., an obscure Texas-based company chaired by Neil Mallon Bush, former President George W. Bush’s younger brother, and Abu Dhabi-based Mubadala Oil and Gas.

No details were given about the size of the offshore fields in question or the required amount for investment.

Berdymukhamedov also gave a year-end deadline for the government to conclude a sale agreement for gas to be sold through the planned Turkmenistan-Afghanistan-Pakistan-India pipeline.

Negotiations on building the trans-Afghan pipeline have lasted more than 15 years, although persistent conflict in the region has weakened the energy route’s prospects.

The Asian Development Bank financed a feasibility study project in 2005 that envisioned the pipeline spanning 1,680 kilometers (1,008 miles) from Turkmenistan’s Dauletabad field to the Indian border village of Fazilka. The cost of construction has been estimated at $3.3 billion with annual supply capacity slated to reach 33 billion cubic meters of gas.