Tuesday, December 15, 2009

China-Turkmenistan gas deal

An important gas deal between China and Turkmenistan has been implemented, as natural gas started flowing to China, which took a good step towards displacing Russia as an important partner in Central Asia's energy sector.

Also, whatever ambitions the US had to get Turkmenistan's gas through Afghanistan (through the planned TAPI pipeline), those ambitions have now suffered a blow.

Russian energy giant Gazprom is contracted to purchase between 50 to 65 bcm annually from Turkmenistan, accounting for about 90% of the Central Asian country's gas exports.

But since an explosion along the pipeline connecting Turkmenistan to Russia in April, no gas has been flowing, stoking tensions between the two countries and leading Turkmenistan to speed up efforts to find alternative export avenues.

The two sides are close to agreement on renewing supplies, but when the flow of gas does resume Gazprom's share of Turkmen gas will have fallen to just over 50% as a result of the new China route and others expected to go on line soon.

A new pipeline to Iran, due to be launched later this month, will eventually send another 8 bcm to Iran, with plans to add 4 bcm more, bringing the total slated for the Turkmenistan's southern neighbor to 20 bcm.

The Turkmenistan-China pipeline is also due to take some gas from Uzbekistan and Kazakhstan to China.

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