Crossroads Asia | Economy | Central Asia

China and Turkmenistan Inaugurate New Phase at Galkynysh Gas Field

Despite consistent chatter about the need for diversification, Ashgabat has struggled to reach customers other than China given infrastructure constraints.

A month after Turkmenistan’s top leader, Gurbanguly Berdymukhamedov, was warmly welcomed in Beijing, China’s Vice Premier Ding Xuexiang joined him at a ceremony inaugurating a new phase of work on the Galkynysh gas field.

According to the AFP, Berdymukhamedov said at the event, “Our country regards China as a strategic partner.”

China is Turkmenistan’s most significant trade partner. Although Ashgabat is shy with statistics, independent assessments suggest that around 90 percent of Turkmenistan’s gas exports go to China via the three existing lines of the China-Central Asia gas pipeline.

A fourth line – Line D – is long delayed. Work formally began in 2014 on the pipeline, which China National Petroleum Corporation (CNPC) has said would expand capacity of the Central Asia-China gas pipeline network up to 85 billion cubic meters (bcm) annually (other sources, such as Turkmen state gas company, Turkmenga, said the expansion would bring capacity up to 65 bcm annually).

Despite consistent chatter about the need for diversification, Ashgabat has struggled to reach customers other than China given infrastructure constraints. And China has been happy to lock in additional supplies from Turkmenistan.

Last week, Turkmengaz and a subsidiary of China’s CNPC signed a contract for the construction of the fourth phase of the development of the Galkynysh gas field.

According to Reuters, the fourth phase project includes the construction by CNPC of a facility for processing an additional 10 bcm of gas ​per year, in addition to the drilling of new wells. The project will be financed entirely by Turkmenistan, a source told Reuters, with Turkmengaz head ​Maksat Babaev saying that it will cost $5.1 billion.

Galkynysh is one of the world’s largest gas fields. Turkmenistan is sitting on an estimated 27.4 trillion cubic meters of natural gas between Galkynysh and the nearby Yashlar and Garakol fields. 

Following its 2006 discovery, contracts to develop the Galkynysh field were awarded to China’s CNPC, South Korea’s Hyundai Engineering, and Petrofac, a British company. The field began producing natural gas in 2013, and since then almost the entirely of Turkmenistan’s gas exports have gone to China.

As Eurasianet noted in late March, Chinese and Turkmen officials differ as to how much gas Turkmenistan........

© The Diplomat