NGW Magazine: Turkmenistan paints itself into a corner
A sudden decision to halt gas supplies to Iran has forced Turkmenistan into overwhelming dependence on China for hard currency income – if it cannot find European markets.
On 1 January, just 24 hours after Iranian officials reported they had reached a new agreement on gas supplies from Turkmenistan, Ashgabat abruptly cut off deliveries. In doing so, Ashgabat appears to have placed its desire to secure as much as $1.8 bn in claimed back-payments ahead of a barter agreement under which it would supply $30bn of gas to Iran over ten years.
Unless or until the Iranian situation is resolved, Turkmenistan has only one customer for its gas: China. That would be a worrying enough issue on its own, but what makes the issue even more problematic from a Turkmen perspective is that China has not only become its only current gas purchaser but is also buying much less gas than expected.
It was not supposed to be like this. Three years ago, on 13 September 2013, China and Turkmenistan signed an agreement for an extra 25bn m³/yr on top of the existing arrangements for 40bn m³/yr of Turkmen exports to China. The target date for delivery of the full 65bn m³/yr, a senior Turkmen official said at the time, was 2020. At that stage, the expectation was that Turkmen exports would reach 30bn m³ in 2014 and 40bn m³ in 2016.
In practice, Turkmenistan exported less than 26bn m³ to China in 2014 (25.9bn m³ according to Chinese Customs statistics and 25.5bn m³ according to BP’s annual Statistical Review. And the pace has scarcely picked up since then. BP listed exports of 27.7bn m³/yr in 2015 while 2016 might even show a drop in deliveries.
Continue reading in NGW Magazine issue 10. Now available at Joomag, for Apple (iPad and iPhone) and for Android
If you are a Premium Subscriber you can access NGW magazine here.
Natural Gas World welcomes all viewpoints. Should you wish to provide an alternative perspective on the above article, please contact firstname.lastname@example.org
Kindly note that for external submissions we only lightly edit content for grammar and do not edit externally contributed content.