By Robert M Cutler
MONTREAL - Figures given in the recent confirmation by British auditors Gaffney Cline that Turkmenistan's South Yolotan gas field is the world's second-largest may themselves underestimate the scale of the field. The auditing firm had estimated in 2008 that South Yolotan contained between 4 and 14 trillion cubic meters (Tcm) with the most likely estimate being 6 Tcm.
Sources in Turkmenistan have lately claimed that the actual high-range figure could be as much as 21 Tcm. This would represent one-tenth of all known gas reserves worldwide, exceeded in quantity only by an offshore field split between Qatar and Iran.
Turkmenistan President Gurbanguly Berdimuhamedow recently noted that developing South Yolotan would require significant foreign investment, but to date China is the only foreign country that has received concessions for onshore fields in the country.
In November 2009, Turkmenistan and China signed a US$4 billion loan agreement to develop the field that would be repaid by gas exports to China. The agreement that the national firm Turkmengaz signed in December 2009 with China to develop the field also had development partners from South Korea and Dubai.
The Chinese partners, State Development Bank and Petrochina, have recently signed another preferential loan agreement with Turkmengaz, likely for a similar amount. Operational wells should be drilled in South Yolotan by the end of next year and plants will be built to take sulfur out of the gas before sending it to China's coast through Uzbekistan, Kazakhstan, and Xinjiang. (See Gas pipeline gigantism, Asia Times Online, July 15, 2008.)
Berdimuhamedow disclosed last month that work on the domestic East-West Pipeline (EWP) across the country's southern regions is being accelerated, although he did not give a date for its expected completion. Work on the project started in mid-2010 and was originally planned to conclude in mid-2015.
This is significant because the EWP is perfectly situated to take gas from South Yolotan to the country's coast for entry into an undersea Trans-Caspian Gas Pipeline (TCGP), making landfall in Azerbaijan for subsequent transshipment to Europe via the projected 4,040 kilometer, 31 billion cubic meters per year (bcm/y) Nabucco pipeline.
According to Wolfgang Sporrer, regional manager for one of the companies participating in Nabucco, recent delays in reaching an agreement with Azerbaijan over Nabucco are due to the need to synchronize the project's implementation with the timing of gas production start-up in "potential supply countries". Turkmenistan is working with Azerbaijan to create the conditions for making it possible to implement a TCGP project. The current TCGP plan involves a 30 bcm/y capacity pipeline.
In Iraq, Austria's OMV has identified gas from the area around Kirkuk in the north also as a potential supply base for Nabucco. Nonetheless on Wednesday this week, at a signing ceremony in Turkey, Project Support Agreements will be made official between the responsible ministries of the five transit countries (Austria, Bulgaria, Hungary, Romania, and Turkey) and the Nabucco participant companies (OMV, Bulgaria's old Bulgargaz under a new name, Germany's RWE, Hungary's MOL, Romania's Transgaz, and Turkey's Botas).
These agreements will complete the international-legal framework necessary for project implementation, on the basis of the transit regime and other elements outlined in the Nabucco Intergovernmental Agreement signed in July 2009. The new documents repeat multilateral government support for the project at a time when those doubting its eventual completion have become more vocal, although there is also a domestic Turkish angle since the ceremony is taking place in the constituency of the country's energy minister just four days before the general elections in the country....
Berdimuhamedow has also underlined his country's continuing interest in the 33 bcm/y Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, which will be sourced not from the South Yolotan deposit but rather from Douletabad. The country does, however, plan to build a connector between the two gas deposits that will enable switching between them.
It was thought that supply and contact negotiations for TAPI would be completed in the first half of this year, but price disagreements with India have prevented that. There is still a long road beyond that, in as much as the various consortia have yet to be established. Many foreign companies have expressed an interest but things have not gotten much further than the Asian Development Bank's detailed feasibility studies. Russia has been discussing with India the possibility of Gazprom's participation in the project.