How Much Transparency on Turkmen Gas Reserves?

The Turkmen authorities are finally bringing in foreign experts to calculate how much natural gas is contained at their largest deposit. Although many investors were pleased to hear the secretive regime was at last opening up about the size of its gas reserves, local analysts warn that the information Ashgabat releases may be partial and selective.



The government-owned media reported in mid-March that the British firm Gaffney, Cline & Associates Ltd had been invited to conduct an audit of the major South Yolotan field in the south-east of the country.



The government’s mineral agency Turkmengeologia says South Yolotan is among the four biggest gas deposits in the world, containing an estimated three trillion cubic metres or more. If proven, this would more than double the country’s confirmed reserves, which recent international estimates put at 2.86 trillion cu m.



Data on Turkmenistan’s oil and gas wealth are sketchy, because no independent surveys have been done. A previous audit conducted by Gaffney, Cline & Associates and the United States firm DeGolyer & MacNaughton has never been made public.



“Although an [internal] audit has been conducted twice in recent years, all the figures are completely confidential and have never been made available in a convincing documentary form,” said one NBCentralAsia analyst in Ashgabat.



President Gurbanguly Berdymuhammedov has shown himself ready to pursue a “multi-vector” energy policy – which means engaging with both western and Russian partners – announced in January 2008 that the reserves of Turkmenistan’s bigger deposits would be defined in line with international standards by the end of this year.



Gas production in Turkmenistan is currently estimated at 80 billion cu m a year, 20 billion cu m of which is used for domestic consumption while the rest is exported to Russia and Iran.



Long-term contracts signed with Russia, China and Iran add up to a future annual commitment of 95 billion cu m – more than the country can produce at the moment.



The government’s ambitious energy development programme envisages raising annual production to 120 billion cu m by 2010 and 250 billion cu m by 2030.



An expert with the state gas corporation Turkmengaz told NBCentralAsia that Berdymuhammedov’s decision to bring in foreign auditors was motivated by a desire to show potential buyers that the country really did have the capacity to meet all its commitments.



“Many people doubt whether Turkmenistan has enough reserves to fulfill its contractual obligations to its customers, so the leadership has moved to satisfy the long-standing demand that experts have been voicing,” he said.



According to a political analyst inside the country, the authorities have asked the auditors to look at South Yolotan, in particular, because they are certain the results will be positive here.



“It’s likely the reserves at this deposit will be proven because when the deposit was just being opened up, a powerful fountain of gas flared for several months before the gas men could tame it,” he said.



Other commentators interviewed by NBCentralAsia said doing an audit of just one deposit would not show what the overall picture was, and the lack of information about other sites would continue to deter potential foreign firms whose investment is badly needed if production is to be increased.



“The amount of the gas produced may simply not be sufficient,” warned Rovshan Ibrahimov, the head of the international relations department at the Qafqas University in the Azerbaijani capital Baku. “Turkmenistan cannot increase gas production on its own, and the investors won’t come in unless they have accurate estimates of gas deposits.”



Annadurdy Khadjiev, a Turkmen economist based in Bulgaria, said that at this stage, there was no pressure to conduct a comprehensive audit. The need for this would arise only if major energy projects like the Trans-Caspian and Nabucco pipelines came to fruition.



To date, existing purchasers like Russia’s Gazprom – the Russian firm whose pipelines currently provide the only major export route for Turkmen gas – are still getting gas from long-established gas fields.



Gazprom, he said, has no need for any new survey of Turkmen gas reserves.



“Nobody wants to waste money on a comprehensive audit,” he said.



(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service is resuming, covering only Uzbekistan and Turkmenistan for the moment).