23-24 May, 2017
Berkarar Hotel
Avaza, Turkmenbashy, Turkmenistan

Market overview
Turkmenistan Oil Gas

Oil & Gas Processing & Petrochemicals in Turkmenistan
A priority area for investment
 
Turkmenistan’s hydrocarbon resources are vast but undoubtedly finite. It is of great importance to the country that these resources are developed as efficiently as possible to maximise revenues and to benefit to future generations in Turkmenistan. A key area where Turkmenistan can find these efficiencies is in the effective processing of oil and gas which enables the country to turn unrefined raw hydrocarbons into more valuable finished petroleum products for domestic use and, more importantly, export. Turkmenistan has therefore made investment in the development of oil and gas processing a top priority, investing billions of USD in recent years and contracting world leading companies to develop these facilities.
 
Natural Gas Processing
Natural gas is processed to remove associated hydrocarbons and fluids to produce pipeline quality, dry natural gas suitable for pipeline transport. Several associated hydrocarbons or natural gas liquids (NGLs), including ethane, propane, butane and natural gasoline, are valuable and can be sold for a variety of different uses including enhancing oil recovery (EOR) in oil wells, providing raw materials for oil refineries and petrochemical plants, and as sources of energy.
 
Oil Refining
Oil refining processes crude oil into products such as fuels and lubricants including  gasoline, diesel fuel, asphalt, liquefied petroleum gas (LPG), heating oil and kerosene and feedstocks for petrochemical production.
 
Petrochemical Production
Petrochemical production uses the associated hydrocarbons from gas processing and some refined oil products to manufacture industrial chemicals, plastics, synthetic rubber, dyes, detergents, solvents, synthetic fibres such as nylon and polyester and fertilizers.
           
Turkmenistan has entered into agreements with Japan Bank for International Cooperation JBIC and the Export-Import Bank of the Republic of Korea K-EXIM - wholly owned by the governments of the countries concerned. The primary function of these banks is to assist in the economic development of foreign countries through the provision of loans and financial services. These banks together with the State Bank for Foreign Economic Relations of Turkmenistan are in the process of implementing several investment projects in oil and gas processing in Turkmenistan.
 
Turkmenistan’s National Gas Company, Turkmengas, in collaboration with a consortium of international companies, is building a gas processing plant in the town of Kiyanly in the Balkan region, for the production of 386,000 tons of polyethylene and 81,000 tons of polypropylene per year.
 
Turkmenistan’s National Chemicals Company, Turkmenchemistry, in collaboration with a consortium of companies, is building a fertiliser plant near Mary for the production of 400,000 tons of ammonia and 640,000 tons of urea per year.
 
Probably the most important gas processing plant currently under construction in Turkmenistan is in the town Ovadandepe in the Ahal region, which is considered to be one of the most significant projects of this scale in the world. The processing plant has the capacity to process 1,785,000,000 cubic metres of natural gas into 600,000,000 tons of Euro-5 standard, high-quality A-92 petrol. The construction of this important plant is a big step forward for Turkmenistan and will have a great influence on the future development of the oil and gas industry of Turkmenistan.
           
Great attention is also being paid to the technical modernisation of existing oil and gas processing facilities. For example, at the Turkmenbashy oil refinery, modern installations for the production of high-octane light petrol from liquefied natural gas, as well as the processing of low-octane petrol into high-octane light petrol, are being built. Future development of the industry is to include new plants for the production of high-quality synthetic liquid fuels and also a liquefied natural gas plant.
 
Turkmenistan places great importance on working with world leading organisations and employing state of the art technologies to create high performance, cost effective facilities producing high demand, highly saleable petroleum products which will have a positive impact on the preservation of the country’s population, environment and ecology, and guarantee the prosperity of Turkmenistan’s oil and gas industry.


Energy prospects in Turkmenistan

John Roberts, a long-time analyst of Caspian energy issues, discusses energy prospects in Turkmenistan and the country’s plans for the future of the industry
Turkmenistan is blessed with gas. Not only does it possess the world’s largest onshore gas field, Galkynysh, but it has just announced a major new world-class discovery, Garakul. Turkmenistan holds at least 10% of the world’s gas with Galkynysh alone containing at least 14.1 trillion cubic metres (tcm), equivalent to 7.6 % of the world’s total proven reserves.
Just how much gas the country possesses remains hard to assess, simply because steadily improving knowledge is showing at least some of the biggest fields to contain ever larger resources. In May, the Garakul discovery was stated by the UK’s Gaffney, Cline and Associates, which is carrying out an audit of the country’s major fields, to possess at least 0.4 tcm. But that was just as the result of drilling one exploration well. GCA noted that they had no idea where Garakul’s southern boundary might lie, which means there is a very good chance that in the next few years, as further wells are drilled, Garakul will turn out to contain far more gas than the current provisional low estimate. As GCA’s Jim Gillett said when announcing the find: “Without doubt, there is another giant structure in the south”. 
Turkmenistan’s gas riches are already shaping the world’s energy use, not least in helping China reduce its reliance in coal. Since the country’s first gas pipeline to China opened at the end of 2009, Turkmenistan has exported more than 100 bcm of gas to China, contributing significantly to China’s policy of diversifying away from coal in order to limit its CO2 emissions.
But while Turkmenistan has abundant supplies of gas its landlocked situation means there are issues when it comes to finding markets. For years Turkmenistan’s gas exports reached the world via Russia – indeed the Soviet Union’s gas exports to Europe came largely from Turkmenistan. But with Russia producing ever more gas on its own, Russian imports have fallen and may vanish completely in the next year or two. Iran, too, is a declining market as its own giant fields increase production.
But if these markets are shrinking, China’s is growing. There are now three parallel pipes carrying Turkmen gas through Uzbekistan and Kazakhstan to China and a fourth, which will take a different route via Uzbekistan, Tajikistan and Kyrgyzstan, is under development. By 2020, Turkmenistan is due to be exporting some 65 bcm a year to China and it would not be surprising if this target was reached well before then.
Meanwhile, the hunt is on to seek new markets. Deputy Prime Minister Baymurat Khojamuhammedov, (his formal title is Deputy Chairman of the Cabinet of Ministers of Turkmenistan) told a Gas Congress at Avaza in May that the country’s twin goals are to develop new exports routes to the south, to India and Pakistan, and west, to Europe.
The issues here are complex. India offers one of the world’s fastest growing gas markets whilst Pakistan’s own gas resources are no longer sufficient to meet demand there. So Turkmenistan naturally wants to see construction of the long-planned 1,735-km Turkmenistan-Afghanistan-Pakistan-India pipeline. The UK’s Penspen is currently carrying out a feasibility study on TAPI. What’s needed next is a company to lead the project and some clarification concerning security conditions in Afghanistan.
In the Caspian, there’s a need to protect the ecology of the Caspian sea, one of the prime reasons cited by Russia in its opposition to a long-proposed Trans Caspian gas pipeline that would carry gas from Turkmenistan to Azerbaijan, and then on to Turkey and other European markets. But access to European markets would enable Turkmenistan to play to its greatest strength: providing gas that costs less to produce than just about anywhere else on earth to the world’s premier import market.

John Roberts, Energy Security Specialist, Methinks Ltd.
 

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