Turkmenistan needs foreign capital for gas pipelines

Mar 13, 1997 01:00 AM

Turkmenistan needs foreign capital fast to renovate domestic gas pipeline systems and build new export routes to hard-currency markets, the head of the state gas concern Turkmengas said. "The problems facing the oil and gas sector follow the collapse of the Soviet Union, which disrupted work on the pipeline system, and now the issue is extremely urgent," Guchnazar Tachnazarov told.
Turkmenistan's natural gas exports, which typically account for over 60 % of export earnings, collapsed after the country became independent in 1991. It relies entirely on Russia's pipeline system to export natural gas, but volumes allotted to it have slumped, in turn restricting the volume of natural gas Turkmenistan can produce. Gas exports fell to 25.4 bncm in 1996, less than half 1993 levels. A deal with Russian Gazprom targets exports in 1997 at 40 bncm, half of which is slated for Western markets. Turkmenistan's gas production also fell sharply to 32.1 bncm from 84 bncm in 1991. It recovered slightly last year and higher exports in 1997 are expected to allow output to rise further to 53 bncm. Domestic consumption fluctuates around 10 bncm a year.
"If we had the customers, Turkmenistan would be able to produce up to 100 bncm of gas a year," Tachnazarov said.
Turkmenistan is exploring building alternative export routes with international energy companies. "For us the key issue is to gain access to new world markets," he said. He added that the investment climate in the former Soviet republic was improving, and that foreign companies need not fear spending money on the country's energy sector. "Today the state can guarantee it will protect the interests of foreign investors," he said. He said $ 300 mm was needed for work on the domestic pipeline system, which can transport up to 95 bncm annually. Export projects have much higher price tags, and face potentially lengthy delays. A pipeline to Iran is underway, and the first gas is due to be delivered in September or October. The pipeline is expected to carry 2 bncm during its first year of operation, possibly rising to 8 bncm in 10 years' time. More ambitious projects to Pakistan and India via Afghanistan and to Japan and China are being discussed, but face potentially lengthy delays.

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