Turkmenistan joins the natural gas elite
by Peter C. Glover
The growth in global natural gas resources continues to grow. In July, a study done by Navigant Consulting estimated
that America's potential gas resources may total 2,200 tcf. That's 50 % more gas than Russia and twice as much as
A more recent study, published in mid-November by consulting firm ICF International, estimated US gas resources at 1,830 tcf. The big US gas numbers are being driven by shale gas plays in Texas, Louisiana, Arkansas, Oklahoma and elsewhere.
And while those US gas reserves are important, the gas story that could alter the balance of power in Asia is coming
out of Turkmenistan. In October, Gaffney, Cline and Associates (GCA), a major petroleum engineering consulting firm,
estimated that Turkmenistan's South Yolotan-Osman gas field is one of the world's largest. The consulting firm's low
estimate for the field as 140 tcf and the high estimate was nearly 500 tcf.
The best estimate of 210 tcf would make South Yolotan-Osman one of the fivelargest gas fields on earth. It would also make it five times larger than the Dauletabad gas field, previously believed to be Turkmenistan's largest, with 50 tcf. It would also dwarf Russia's giant Shtokman field, which is estimated to hold 140 tcf.
GCA's Jim Gillet was quoted as saying, "Production at South Yolotan-Osman can be built up gradually to 70 bn cm a
year (2.5 tcf per year)." That would double Turkmenistan's current annual production. GCA's best estimate for a
separate field at Yaslar has a further 53 tcf of gas. Gillet did not say how many more fields GCA is researching, or
when a final report might be released.
The BP Statistical Review of World Energy currently shows Turkmenistan's gas reserves at just over 100 tcf. But the Turkmen government claims that total reserves now exceed 700 tcf. While that may be true, there are nagging questions over the country's ability to deliver on all of its gas commitments. Russia, China, Europe and Iran all want the gas. And for the near term, the key question is this: who will get the best access to the South Yolotan-Osman gas field?
The big increases in Turkmenistan's gas potential will be welcome news to the European and US backers of the Nabucco
pipeline project. The westward-bound Nabucco, slated for construction in 2010 and due to open in 2013, is set to run
under the Caspian Sea via Turkey, thus bypassing Russian soil. Nabucco's prime purpose is to reduce Europe's
dependence on Russian gas supplies. But Nabucco was always dependent on Turkmenistan, or possibly Iranian, gas.
The viability of both sources, however, had been in doubt. All that may now change.
Vladimir Putin and his cronies at Gazprom are undoubtedly nervous about Nabucco. It poses a genuine threat to
Russia's energy-driven strategy. Russia's rival project to Nabucco, the South Stream pipeline, designed to further
southern Europe's gas dependency, has yet to take off, in part due to US pressure on South Stream's transit
countries. Meanwhile, Tehran, the other major participantin Russia's proposed gas cartel, sees Nabucco as a passport
to the lucrative European market.
Even so, in the renewed game over Turkmenistan's latest gas finds, Russia still holds vital cards. The reality is Russia needs Turkmenistan's gas if it is to fulfil its supply commitments to the European market, a market that accounts for 70 % of Gazprom's current total revenue.
China also has designs on gas from Central Asia. It wants to more than double its ratio of gas consumption as a
proportion of its total energy use by 2010. In July, Turkmenistan President Gurbanguly Berdymukhamedov hosted a visit
from his Chinese counterpart, Hu Jintao. A new gas pipeline to China with a capacity of over 1 tcf per year topped
China intends the Turkmenistan pipeline to form the first of three that will carry gas supplies from Uzbekistan and Kazakhstan as well. And China will have no scruples about directly offering what Turkmenistan most needs: greater economic development. More pragmatically, China may simply choose to work with Russia in, among other things, helping it to develop Turkmenistan's gas production infrastructure generally.
In July, China's Vice Premier Wang Oishan hosted a visit from Russia's Deputy Prime Minister Igor Sechin, ostensibly
to launch an "energy negotiation mechanism." Neither side subsequently made any public statements on what was agreed,
but it is believed an energy accord was signed.
The geopolitics of the former Soviet Union and surroundings is clearly vital for the future energy security and stability of the West. But Turkmenistan's newfound gas riches could ultimately allow it to send gas both east and west, thereby rivalling Russia, and perhaps Iran, s a regional gas superpower.