OREANDA-NEWS. June 29, 2009. The bilateral documents signed upon concluding the talks between President Gurbanguly Berdimuhamedov and Vice Premier of the State Council of China Li Keqiang in Ashgabat highlighted the major aspects and trends in long-term of Turkmen-Chinese gas partnership.

According to the State Agency of Hydrocarbon Management and Use under the President of Turkmenistan these documents were a logical continuation of the ongoing joint energy projects and specified the next steps to develop and expand Turkmen-Chinese cooperation.

In particular, the new contract for the purchase of 10 billion cubic metres of natural gas a year between the Turkmengaz State Concern and China National Petroleum Corporation officially documented the top level agreement to increase Turkmen gas export to 40 billion cubic metres of ‘blue fuel’. As is known, the partners signed the contract for supply of 30 billion cubic metres each year for 30 years.

Turkmenistan intends to start to supply gas to China this December via the Turkmenistan-China gas pipeline. For this purpose the pace construction of the pipeline was accelerated. CNPC is planning to put the pipeline into operation according to schedule. 

As is known, Turkmen gas will be supplied to China from the fields in the Bagtyyarlyk contractual territory on the right bank of Amu Darya River. These fields are developed by CNPC international Ltd. in accordance with the production sharing agreement signed with the State Agency of Hydrocarbon Management and Use under the President of Turkmenistan. Recently the partners signed the gas purchase contract, according to which gas produced under the production sharing agreement will be bought on the border of Turkmenistan by PetroChina International Company Limited.

In addition, the partners concluded the agreements of gas and condensate extraction in the Bagtyyarlyk territory. The documents stipulate for the technical specifications and obligations of the parties under the production sharing agreement.

Collaboration of the Chinese companies in development of the largest deposit – Southern Yoloten-Osman is an important step to expand bilateral mutually beneficial partnership. As is known, recently President of Turkmenistan Gurbanguly Berdimuhamedov set the task to accelerate the development of the gas fields in the country. This is that the framework intergovernmental agreement on the lax loan, which will be provided by China to Turkmenistan, is aimed at. Under the agreement the Turkmengaz State Concern signed the loan agreement amounted to US\\$4 billion with the State Development Bank of China.

The purpose loan will be spent to implement the first phase of commercial development of Southern Yoloten-Osman that stipulates for the execution of works on gas-field construction. Today the specialists of the State Concerns Turkmengaz and Turkmengeologia are engaged in these works. Collaboration with the foreign partners and the use of advanced technologies will significantly accelerate the works to complete this gas field with the great resource potential for commercial production.

The service companies from several countries, including China, will be engaged in the large-scale work in the region. In particular, it is planned sign the service contract for well drilling and construction of ground infrastructure including a gas sulphur-refinement unit with the capacity of 10 billion cubic metres a year with CNPC in the near future.

Today Turkmenistan and China pay special attention to development of mutually advantageous gas partnership regarding it as a strategic field of the national interests. For Turkmenistan has abundant hydrocarbon resources and China has accumulated the profound experience in hydrocarbon prospecting and production and stands ready to offer state-of-the-art oil and gas equipment and advanced technologies concerting efforts is deemed by the partners quite effective and mutually beneficial.

Southern Yoloten-Osman deposit will be the major raw materials base, which will supply gas via the East-West pipeline. As is known, the tender for design and construction of the East-West gas pipeline was announced in Turkmenistan. The independent audit of the reserves of this deposit carried out by the British firm Gaffney, Gline & Associates confirmed the giant gas reserves and the profound energy potential of Turkmenistan, in general.

To achieve the goals of the strategy of diversification of energy transit to international markets Turkmenistan actively develops the new options including the European and Asian vectors along with the traditional gas export routes. That is the aim the East-West Pipeline Project. Connecting the gas fields throughout the country into the single gas transportation network this new gas line will allow exporting ‘blue fuel’ from Turkmenistan to international markets in any direction.