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Ashgabat, Beijing sign deals to expand Turkmen gas exports to China

Highlights

Ashgabat and Beijing have signed a number of deals on development of the supergiant Galkynysh gas field in Turkmenistan and related infrastructure during a visit by China's President Xi Jinping to the Central Asian state Tuesday.

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The deals are within the framework of previous agreements to boost natural gas supplies from Turkmenistan to China to 65 billion cubic meters/year by 2020.

Under the agreements signed Tuesday, China will finance the second stage of development of the Galkynysh gas field, according to a statement posted on the Turkmen government's website.


No details on the loan have been revealed. China National Petroleum Corp. said in a statement on its website that state-run Turkmengaz signed a financing deal with China's policy bank China Development Bank for the project.

In addition, Turkmengaz and CNPC have inked a contract to design and build a 30 Bcm/year upstream complex for the Galkynysh second stage. The deal includes an engineering, procurement and construction agreement, with construction anticipated to be completed by 2018, CNPC said.

The two also signed a contract on additional supplies of 25 Bcm/year to China, which would increase total supplies of the Turkmen gas to that country to 65 Bcm/year.

The two countries agreed to build the fourth route, Line D, of the Turkmenistan-China pipeline, which will run via Uzbekistan, Tajikistan and Kyrgyzstan, to deliver the newly agreed volumes to China. CNPC said it is currently planning for construction of this pipeline.

The deals were signed in the presence of Xi and Turkmenistan's President Gurbanguly Berdymukhamedov.

A total of 13 documents were signed between Turkmenistan and China during Xi's visit, bringing the cooperation between the two countries to a new strategic level, the two presidents said after the signing ceremony, according to the document.

Xi said the close cooperation in the gas sector between both countries reflects the high level of trust in their strategic relationship. He added that the partners are aiming to accelerate construction of the third route of the Turkmenistan-China gas pipeline and ensure the implementation of its forth line.

Commercial production at the first phase of Galkynysh, the world's largest onshore gas field, is expected to be launched this month and reach its designed level of 30 Bcm/year by the end of 2014.

CNPC and Turkmengaz signed an initial sales and purchase agreement in July 2007 for China to import 30 Bcm/year of Turkmen gas for 30 years. In 2008, the two companies agreed to boost the volume to 40 Bcm/year by 2015.

Turkmenistan began delivering gas to China in late 2009 through a 1,911-km, 30 Bcm/year pipeline that runs through Uzbekistan and Kazakhstan, and enters China in the northwestern Xinjiang province.

Construction of the second line of the pipeline network dubbed Central Asia-China, with 10 Bcm/year capacity and the potential to increase to 15 Bcm/year, is expected to be completed in 2015.

Preparation work for construction of the third, 25 Bcm/year line, or Line C, started last year. CNPC said construction of Line C would be completed by the end of this year. The line was previously expected to start delivering gas in 2014.

After Turkmenistan, Xi is expected to visit Kazakhstan, Uzbekistan and Kyrgyzstan before heading to St. Petersburg, Russia, for a G20 summit.

--Nadia Rodova, nadia.rodova@platts.com

--Song Yen Ling, yenling.song@platts.com

--Edited by Meghan Gordon, meghan.gordon@platts.com