CAPITAL: ASHGABAT
MONETARY UNIT: MANAT
REFINING CAPACITY: 236,970 B/CD
OIL PRODUCTION: 143,000 B/D
OIL RESERVES: 546 MILLION BBL
NATURAL GAS RESERVES: 101 TCF
Growing sales of natural gas to Iran and Russia boosted Turkmenistan's economy to its first recovery since the republic became independent from the former Soviet Union.
At midyear 2000 the country looked toward real GDP growth of 6% for the year. Oil and gas anchor the country's economy.
Establishment of maritime borders in the Caspian Sea were the subject of dispute since the mid-1990s between Turkmenistan and Iran, Kazakhstan, Azerbaijan, and Russia. Of particular interest to Turkmenistan was division of a sizable oil and gas field, called Kyapaz by Azerbaijan and Serdar by Turkmenistan. The disputes delayed development of the 360 million bbl field.
Turkmen officials pointed out that the five countries were going about business in areas indisputably their own and negotiating when disagreements arose in areas where ownership was less clear.
Government action in 1998 resulted in setup of five state oil and gas concerns. They are:
Turkmenrozgaz, responsible for gas exports through Russia.
Turkmenneftgaz, responsible for oil and gas marketing.
Turkmengeologia, responsible for exploration.
Turkmenneft, responsible for oil production.
Turkmenneftgazstroi, responsible for oil and gas-related construction. Upstream developments
Turkmenistan began seeking tenders for exploration and production in the Caspian Sea, and Western Geophysical offered 16,000 line-km of 2D seismic data acquired in 1996-98.
The package included 3,500 line-km of transition zone and land well tie data. Geophysicists with Minneft, Turkmenneft, Turkmengeologia, and Western were interpreting the data.
The package included cross sections showing well log correlation between the Fersman 1, Livanov 12, Livanov 6, Ogurch 1-2, West Ordekli 1, West Ordekli 2, and Chodgaluviev 2 wells.
Canneft Inc., Calgary, signed an agreement in mid-2000 with Turkmengeologia in Ashgabat to evaluate the Adzhiyap oil and natural gas territory, a 2,000 sq km block in southwest Turkmenistan on the border with Iran and along the Caspian Sea coast.
Canneft and Turkmengeologia were to conduct a joint technical evaluation of the Adzhiyap territory during 6 months and were to negotiate for an exploration license.
The technical evaluation would concentrate on the reprocessing of 2,500 km of 2D seismic data, detailed geologic investigation, and infrastructure evaluation.
Canneft said the Adzhiyap territory was a "natural extension" of oil and gas fields contiguous to the block. The company postulated block reserves at 1-3 tcf of gas.
The existing gas pipeline in the Adzhiyap territory and access to the Caspian Sea mitigated the marketing risk, said Canneft.
The Soviet Union was trying to attract foreign investment to Adzhiyap territory even before Turkmenistan became independent.
Another upstream joint venture, Dragon Oil PLC, London, was about to spud the first of three wells at Lam field in the Cheleken Contract Area in the eastern Caspian Sea.
Dragon, almost 70% owned by Emirates National Oil Co. since late 1998, operated a 235,000-acre concession including Lam and Zhdanov fields in 10-30 m of water near the Cheleken Peninsula. The fields produced 8,000 b/d of oil and 1 million cu m/day of gas from 19 wells.
Only 6% of original proved and probable reserves had been produced. Dragon said expansion of production to 80,000 b/d was possible with full field development.
The 25-year contract took effect May 1, 2000. Dragon signed a crude oil swap contract with Naftiran Intertrade Co. Ltd. under which Dragon would ship Turkmen crude to Neka, Iran, and in return receive equivalent barrels at Kharg Island in the Persian Gulf. The swap fee was $17/tonne.
Foreign Minister Boris Shikhmuradov said Turkmenistan wanted to hike oil and gas production to 3 tcf/year and 204 million bbl/year in 2005 from 800 bcf/year and 51 million bbl/year in 1999. Processing activity
Turkmenistan's two refineries are at Chardzou in northeastern Turkmenistan (120,000 b/d) and at Turkmenbashi on the Caspian Sea (116,000 b/d).
Combined throughput was 90,000 b/d in 1999, but the government intended that runs increase to 132,000 b/d in 2000.
A $1.3 billion modernization project was under way at the Turkmenbashi refinery. It included installation of a 1.8 million tonne/year (tpy) catalytic cracker and a 750,000 tpy catalytic reforming unit. The upgrade included a 1.8 million tpy alkylation unit, an 80,000 tpy lubricants unit, and a 90,000 tpy polypropylene unit.
Gent Oil of the UK began work in late 2000 on a $10.6 million desalination facility and a steam furnace, and Emerol Ltd. of Ireland was rebuilding the vacuum unit and adding storage facilities. Transporting Turkmen gas
Turkmenistan reached agreement early in the year to boost gas exports to Iran to 460 bcf/year. The increase was to take effect by yearend 2000. The price was to be $40/cu m.
Shikhmuradov termed the deal a huge increase, claiming that volumes averaged only 70 bcf/year in 1999. A new compressor station to be finished in April 2000 was to boost capacity of the 125-mile pipeline to 460 bcf/year.
Separately, a project to construct a Trans-Caspian Gas Pipeline was developed around a gas sales agreement signed in May 1999 between Turkmenistan and Turkey for delivery of as much as 16 bcf/year of Turkmenistan gas via Azerbaijan and Georgia to Turkey from 2003.
The 1,650 km single-pipe system would originate at the Pustynnaya compressor station in eastern Turkmenistan and involve dual 300 km, 28-in. or larger segments across the Caspian Sea.
The pipeline proponents recognized that gas finds made in Azerbaijan in 1999 changed the supply balance. Alternatives were under study.
Discovery of large gas reserves at Shah Deniz field in the Caspian off Azerbaijan complicated the trans-Caspian route plan.
For Turkmenistan, with its huge and unused gas export potential, the Turkish market represents the sole viable export option, at least in the short term. Iran and Russia were also competing to ship gas to Turkey, and the combined supply offers far exceeded Turkey's projected gas demand for 2001-2010.
Furthermore, Turkmenistan is farther from Turkey than Azerbaijan, and a trans-Caspian line would have to cross Azeri territory.
Source: http://www.pennwellpetroleumgroup.com/articles/ipe_print_toc.cfm?volume_num=2001
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