2012-07-30 01:04:25 - Turkmenistan Oil and Gas Report Q3 2012 - a new market research report on companiesandmarkets.com

The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.Turkmenistan could potentially benefit from a gas export bonanza, with a major reserves upgrade at the South Yolotan field alone providing the basis for long-term supply agreements that should transform the country´s economic outlook. There are technical and commercial hurdles to overcome, but timely infrastructure investment and moves to improve international relations should guarantee that Turkmenistan becomes a key player in global gas supply.

The main trends and developments in Turkmenistan´s oil & gas sector are:

- Turkmenistan´s South Yolotan gas field has been confirmed as the

 

 

world´s second largest following an appraisal by auditor Gaffney, Cline & Associates (GCA). The field is thought to contain 13.1-21.2trn cubic metres (tcm) of natural gas. The former Soviet Republic holds the world´s fourth-largest natural gas reserves and plans to treble annual gas output to 230bn cubic metres (bcm) by 2030, 180bcm of which would be for export purposes.

- According to Cedigaz data, China received 3.55bn cubic metres (bcm) of gas from Turkmenistan in 2010. Ashgabat has indicated supplies could have risen to 17bcm in 2011 and should climb further to 20bcm in 2012. China imported more than 5.7bcm of gas from Turkmenistan in the first five months of 2011, according to a China Petroleum Daily article cited by Reuters on June 13 2011. The two countries are in negotiations over a long-term contract to supply 60bcm per year to China, although little progress has been made on final terms.

- Our forecasts show that the country´s gas output will increase from an estimated 65bcm in 2011 to 95bcm by 2016, with a further substantial increase to 155bcm by 2021 as additional fields enter production. Domestic demand is expected to rise from an estimated 22bcm to 31bcm during the 2011-16 period. By 2016, Turkmenistan will be exporting 64bcm, with this figure to rise to 110bcm by 2021.

- The government is targeting higher liquids production. However, the oil sector is struggling to meet its growth goals owing to a shift to gas production and lagging foreign investment. According to 2007 reports, Turkmenistan initially aimed to produce 2.2mn barrels per day (b/d) by 2030. Although this target has been reduced to 1.35mn b/d by 2030, according to an unnamed source speaking to Reuters in March 2011, we still see this output target as rather optimistic. BMI estimates oil production averaged 207,190b/d in 2011 and this will rise to 346,500b/d by 2016.

- The country exports roughly half of its production. Local demand is estimated to have hit 125,000b/d in 2011 and is subsidised by the Turkmen government. BMI forecasts demand to increase to 159,000b/d by 2016, leaving export potential of 187,000b/d.

- Turkmenistan´s dependence on oil prices leads to high volatility in the country´s export revenues. Our assumptions of tight supply due to booming demand in emerging markets is clearly an opportunity for the country. As a result, we forecast OPEC basket oil prices to increase from an estimated US$107.52 per barrel (bbl) in 2011 to US$111.47/bbl in 2012, thus creating an upside risk for the Turkmen macroeconomic outlook.

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