The Natural Gas Conundrum (Ukázka, strana 99)

Turkmenistan’s largest proven reserves are located in the Galkynysh gas field, probably the second largest gas field in the world after the South Pars field in the Persian Gulf, which is shared by Iran and Qatar.323 The Galkynysh field includes other fields that were formerly regarded as separate from it. These are the Yolotan, Minara, Osman, and Yashlar fields.324 Other essential gas deposits in Turkmenistan are the Döwletabat-Donmez field, Korpedzhe field, Malay field, Samandepe field, and Shatlyk field.

The production in the Döwletabat-Donmez field began in 1982. It is located on the border with Iran near the town of Seraghs. This is where pipelines I, II, and IV of the Central Asia–Center Gas Pipeline System originate. Its reserves are estimated at 1.6 tcm. The Korpedzhe gas deposit is located in southwestern Turkmenistan. It is the starting point of the Korpedzhe–Kurdkuy Gas Pipeline commissioned in 1997, which serves northern Iran. Its reserves were initially estimated to be 141.9 bcm. The Malay deposit is located on the left bank of the Amu Darya river. In 2009 it was connected to the Turkmenistan–China Gas Pipeline via a separate branch called the Malay–Bagtyyarlyk Line. The Samandepe deposit was discovered in 1964 with reserves that were initially estimated at 102 bcm.

An on-site processing plant was built there in 2009. The Shatlyk deposit is located in the Amu Darya river basin. The field initiated production in 1973 when it was connected to the Central Asia–Center Gas Pipeline System. At present, it is also connected to the East–West Interconnector Gas Pipeline.325 There are many other important natural gas deposits in Turkmenistan, but they are all dwarfed by the Galkynysh gas field, which is Turkmenistan’s most important economic and geopolitical asset.

Turkmenistan is one of the gas-producing countries that can export a substantial portion of their production because of relatively low domestic demand. However, domestic demand is rapidly increasing, from 4 bcm in 1992 to 29.5 bcm in 2016, in part because the government supplies the population of Turkmenistan with gas free of charge under specific quotas.326 This still leaves more than half of the country’s production 323 Muhammad Quazi, “Central Asia: Crossroads for Global Economic Stratagem,” Journal of Political Studies 22, no. 1 (2015): 289–301.

324 “Sverhgigantskoe gazovoe mestorozhdenie v Turkmenistane poluchilo nazvanie Galkynysh,” Turkmenistan.ru, November 20, 2011.

325 Martha Brill Olcott, “International Gas Trade in Central Asia: Turkmenistan, Iran, Russia and Afghanistan,” Geopolitics of Natural Gas Study, Working Paper No. 28, James A. Baker III Institute for Public Policy (2004), https://fsi-live.s3.us-west-1.amazonaws.com/s3fs-public /Turkmenistan_final.pdf.

326 “Accounting for Gas Consumption According to International Standards,” Nebit-Gaz, February 2, 2016.

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available for export. In contrast, neighboring Uzbekistan consumes almost all of its production domestically. Turkmenistan’s state budget is highly dependent on the export of natural gas, cotton, and petrochemicals. Taxes represent only approximately one quarter of its government revenues.327 Turkmenistan’s ability to export natural gas is illustrated in Table 16.

Table 16: Turkmenistan’s exports of natural gas, 2008–2019 (bcm)

Year

Russia

China

Iran

2008

39.10

0.00

6.50

2009

10.70

0.00

6.50

2010

9.68

3.55

6.50

2011

10.14

14.25

10.14

2012

9.86

21.29

9.05

2013

9.88

24.41

4.66

2014

9.05

25.49

6.55

2015

2.81

27.75

7.24

2016

0.00

34.20

6.70

2017

0.00

31.70

1.70

2018

0.00

33.30

1.90

2019

0.00

31.60

0.00

Source: Statistical Review of World Energy

Turkmenistan’s gas production reached its Soviet-era maximum in 1989 with 81.4 bcm.328 Production quickly decreased during the 1990s because of the breakup of the Soviet Union, falling to 13.1 bcm in 1998. This trend somewhat improved after 2000 as production reached 66.1 bcm in 2008. However, production fell once again due to a crisis in the country’s relations with Russia, falling to 36.4 bcm. The situation soon improved thanks to the commissioning of the Turkmenistan–China Gas Pipeline. In 2015, Turkmenistan’s total production reached 69.6 bcm (see Table 4). Moreso than Russia, China stands out as the most promising market for Turkmenistan’s natural gas because it consumes imported gas directly rather than re-exporting it and because its consumption will 327 Annete Bohr, Turkmenistan: Power, Politics and Petro-Authoritarianism (London: Chatham House, 2016), 20–35.

328 “BP Statistical Review of World Energy June 2016,” BP plc, www.bp.com, June 1, 2016.

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very likely grow in the short- to mid-term due to Chinese government policies that prioritize environmental protection.

This subchapter on the energy resources of Turkmenistan shows that the energy sector is the backbone of the state’s economy. Turkmenistan became one of the most important energy exporters globally in the 2010s because of newly found natural gas deposits. Turkmenistan’s political elite understand how important the country’s energy sector is. Berdimuhammedow’s regime subsidizes domestic energy supplies because the political elite are interested in controlling the energy sector and consider it a strategic asset for maintaining popular support for the ruling regime.

State Actors in the Energy Sector The key document that establishes the institutional framework for the development of Turkmenistan’s energy sector is the Law on Hydrocarbon Resources that was passed in August 2008.329 It primarily focuses on the powers and responsibilities of the State Agency for Management and Use of Hydrocarbon Resources, controlled by the President of Turkmenistan himself. The Agency is the principal institution for the management of Turkmenistan’s oil and gas resources. It has the power to issue licenses for exploration and development of deposits, oil and gas production and transportation, and to conclude agreements on production sharing. It has the last say in setting tariffs for transport through the country’s gas pipelines. It concludes agreements with foreign investors and sets rules for their operations in the country.330 The Agency was officially mentioned for the first time on March 12, 2007, when the legislation establishing it was published. It effectively replaced the Competent Body for the Use of Hydrocarbon Resources, also controlled by the President of Turkmenistan, which was disbanded before the Agency was created.331 The Agency derives revenue from royalties, bonuses, and income from PSAs and other contracts. It transfers 20 percent of its income to the state budget. The rest remains in the budget of the Agency for its operation. The government fully controls the Agency, and only the president, who appoints its director, can overrule 329 “Zakon Turkmenistana ob uglevodorodnykh resursakh,” Turkmenistan.ru, August 20, 2008.

330 “Gosudarstvennoe agentstvo po upravleniyu I ispolzovaniyu uglevodorodnykh resursov pri Prezidente Turkmenistana,” Nebit-gaz, www.oilgas.gov.tm.

331 “Ispolzovanie uglevodorodnykh resursov Turkmenistana budet kontrolirovat novyi organ,” Turkmenistan.ru, March 10, 2007.

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