China moves to secure more supplies of Turkmen gas

MOSCOW: China is searching for more natural gas sources from neighbouring countries, as the country, one of the world’s largest energy consumers, needs more of the relatively clean fuel to meet rising domestic demand, Arab News reported.

On August 23, the state-owned Turkmengaz and China’s CNPC held a ceremony marking the restart of development work at three major wells at Turkmenistan’s giant natural gas field Galkynysh, according to Nebit-Gaz, an Ashgabat-based Internet news portal.

When commissioned, each of three wells will have a daily output of three million cubic meters, adding around 10 per cent to the field’s current potential output.

Turkmenistan will pay CNPC for its services by supplying 17 billion cubic meters of gas a year for the period of three years to a total of 51 billion cubic meters, the AP News said on August 24.

A contract signed earlier in July this year between Turkmengaz and CNPC Chuanqing Drilling Engineering Company stipulated that the Chinese company should complete construction and commission the three extremely complex gas wells within 30 months in exchange for future gas supplies.

Initially, the development of the wells had begun back in 2007 under a contract signed with the Gulf Oil and Gas FZE (UAE). However, the work wasn’t completed, the Turkmenistan government said in a press release published on its website on July 16.

China is already the main export market for Turkmen gas with annual supplies reaching 40 billion cubic meters of gas.

Analysts at Oxford Institute of Energy Studies said in a report issued their initial forecast of around 40 billion cubic meters of gas in incremental demand from China in 2021 is “likely to be easily surpassed”.

Currently, the Galkynysh field, which has an area of 4,000 sq-km and 27 trillion cubic meters of estimated reserves, includes 45 wells with a daily flow rate of two million cubic meters each, according to Nebit-Gaz.

China is already the main export market for Turkmen gas with the annual supplies reaching 40 billion cubic meters of gas, according to AP.

But the demand for gas from China is far from being met. Analysts at Oxford Institute of Energy Studies (OIES) said in a report issued earlier this month their initial forecast of around 40 billion cubic meters of gas in incremental demand from China in 2021 is “likely to be easily surpassed”.

“Although the ongoing reforms in the power sector to encourage the use of renewables, given China’s focus on reliability in power supplies, gas consumption is likely to grow strongly again next year, possibly by some 30 billion cubic meters,” the report said.

In 2019, China gas demand reached 300 billion cubic meters and by 2022 it could be close to 400 billion cubic meters, according to OIES estimates.