JAN. 12 2016 (The Conway Bulletin) – Kyrgyzstan will begin construction work on a new gas pipeline running to China in March, media reported quoting Deputy Economy Minister Aibek Kaliev. The pipeline, which will take several years to build, will complete a route running from gas fields in east Turkmenistan through Uzbekistan and Tajikistan and on to Kyrgyzstan and China.
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(News report from Issue No. 263, published on Jan. 15 2016)
DEC. 20 2015 (The Conway Bulletin) — Swiss company ABB will provide the IT control infrastructure for the TANAP pipeline which will pump 16b cubic metres of gas from Azerbaijan to Turkey and link up with the Europe-bound gas grid (Dec. 15). ABB has already worked on telecoms systems for pipelines, notably with the Baku-Tbilisi-Ceyhan oil pipeline. The company did not disclose the value of the contract. TANAP is considered vital to boosting European deliveries of Azerbaijani gas.
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(News report from Issue No. 261, published on Dec. 20 2015)
DEC. 15 2015 (The Conway Bulletin) – After a decade of talks, Turkmen president Kurbanguly Berdymukhamedov and leaders from Afghanistan, Pakistan and India officially started construction of the TAPI pipeline that, they hope, will pump gas from Central Asia to South Asia by end-2018.
The $10b project is ambitious and fraught with risk. For a start nearly half the 1,800km route crosses Afghanistan where security has worsened over the past couple of years. This week the Asian Development Bank cut funding for a Turkmenistan-Tajikistan rail project that also crossed north Afghanistan because of security concerns.
Still, at the official opening ceremony for the TAPI pipeline in Mary, Turkmenistan, Mr Berdymukhamedov was in an upbeat mood.
“TAPI is designed to become a new effective step towards the formation of the modern architecture of global energy security, a powerful driver of economic and social stability in the Asian region,” media quoted him as saying.
By December 2018, so the plan goes, Turkmenistan should start pumping 33b cubic metres of gas a year to India.
But, as Anupama Sen, senior research fellow at the Oxford Institute for Energy Studies, explained for India, TAPI has always been more of a political, rather than gas supply, project. She said India is increasing coal production to meet power demand as it is cheaper than importing gas.
“India’s negotiations over TAPI have been driven by diplomacy,” she said.
India has been trying for years to bolster its influence in Central Asia where Russia and China are so dominant. It lost out in 2013 on a stake in the Kashagan oil field in the Kazakh sector of the Caspian Sea to China. TAPI now gives it a stake in Central Asia.
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(News report from Issue No. 261, published on Dec. 20 2015)
DEC. 1 2015 (The Conway Bulletin) — Norwegian oil and gas company Statoil completed its retreat from the South Caucasus gas industry with its sale of a 20% stake in the Trans-Adriatic Pipeline (TAP), part of a pipeline network that will pump gas from Azerbaijan to Europe.
Italian pipeline company Snam bought Statoil’s TAP stake for €208m ($227m), increasing Italy’s commitment in the Southern Gas Corridor, running from Azerbaijan, through Turkey and Greece, to Italy.
Over the past two years, Statoil has quit Azerbaijan,’s gas sector selling its 25% stake in the giant Shah Deniz field and its 15.5% stake in the South Caucasus Pipeline, which transports gas from Shah Deniz to Georgia and Turkey.
Statoil hailed its sale of its stake in TAP as generating value for share- holders but the final price of €208m is lower than the €400m that industry analysts had forecasted over the summer.
Statoil still owns an 8.56% stake in the Azeri-Chirag-Guneshli field and a 8.71% share in the Baku-Tbilisi-Ceyhan pipeline.
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(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 4 2015 (The Conway Bulletin) – Kazakhstan’s Kaztransgas, the state- owned pipeline monopoly, opened a third pipeline pumping gas to China, highlighting Chinese dominance over Central Asia’s energy resources.
Line C will bring the total capacity of the Kazakhstan-China pipeline to 55b cubic metres of gas a year. The Kazakhstan-China pipeline is part of
the 1,300km pipeline network that spans Central Asia. Its main purpose is to pump Turkmen gas to China, although Uzbekistan and Kazakhstan also contribute.
The pipeline cost $1.2b to build and was described by Kaztransgas as the biggest infrastructure project in independent Kazakhstan.
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(News report from Issue No. 259, published on Dec. 4 2015)
NOV. 20 2015 (The Conway Bulletin) – Kazakhstan’s pipeline monopoly Kaztransgas launched the $3.5b Beineu- Bozoi-Shymkent gas pipeline, five months early. The pipeline is important because it pumps gas from fields in the north-west to urban centres in the south.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 23 2015 (The Conway Bulletin) — PetroChina, a subsidiary of China’s state-owned energy company CNPC, said it wants to sell a 50% stake in the Central Asia-China gas pipeline for $2.4b in order to turn a profit this year, a requirement in its government mandate.
The likely buyer of the 50% stake in the Central Asia-China pipeline is another Chinese company, state-owned China Reform Holdings, Bloomberg reported.
The ownership switch shouldn’t change operations at the pipeline, which mainly pumps gas from Turkmenistan, but its does highlight both China’s ownership of energy infrastructure in Central Asia and, also, how pressure on profits in China is having an impact in the region.
China’s economy has slowed this year, undermining commodities prices around the world and triggering a switch in policy from China across various industries. In the oil and gas sector, it plans to unbundle upstream and midstream operations, a process that will have an effect on oil and gas fields across Central Asia as well as on pipelines.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 26 2015 (The Conway Bulletin) — Tengizchevroil (TCO), the consortium producing oil at the Tengiz field near Atyrau in west Kazakhstan, has stopped oil shipments via tanker from the Caspian port of Aktau because of high Eurasian Economic Union (EEU) export tariffs, a port official told Astana TV.
TCO declined to deny the story. Instead it confirmed that it was now exporting more of its oil through the CPC pipeline which pumps oil from Tengiz around the top of the Caspian Sea to Novorossiysk in Russia.
In an interview with Astana TV, a channel owned by the ruling Nur Otan party, Marat Ormanov, director at KazMorTransFlot, the shipping subsidiary of Kazmunaigas, said TCO shipment for crude oil had dropped to zero.
“TCO left in July, re-routing its entire output through the Caspian Pipeline Consortium. Other companies have followed suit and now there is almost no one left in Aktau,” Mr Ormanov said.
A news reporter for Astana TV then quoted him as saying that part of the reason that TCO had quit the Caspian Sea route was because of increased export tariffs imposed by the EEU. The EEU is the Kremlin-led trade bloc that includes Kazakhstan, Belarus, Kyrgyzstan and Armenia.
In December 2013, tankers shipped over 77,000 tonnes of oil every week from Aktau across the Caspian Sea. This year, KazMorTransFlot had planned to send a similar amount to both Makhachkala and Baku. Oil production in Kazakhstan has dropped off this year because of a slump in prices. Companies have also been looking for cheaper ways to export it.
This has coincided with the introduction of EEU rules and tariffs which many businesses have complained add a layer of bureaucracy and complicate business.
The Tengiz field is important to Kazakhstan. It is its biggest and, arguably, most successful oil project. The partners in the project are Chevron, ExxonMobil, Kazmunaigas and LukArco.
In response to the Astana TV interview, TCO told The Bulletin that it was moving away from exporting oil via Aktau.
“TCO has maximised transportation through the Caspian Pipeline Consortium system so as to take advantage of this more cost-effective route,” said Yerlan Kassym, public affairs adviser.
“As a result, transportation through other routes, including the more expensive southern route via the Aktau port, have been minimised.”
TCO declined to comment on EEU tariffs and duties. The Caspian Pipeline Consortium (CPC) is exempt from EEU tariffs because it is classified as an international pipeline.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 22 2015 (The Conway Bulletin) — Dubai-based Dragon Oil said it was considering investing in the proposed TAPI gas pipeline project which aims to deliver gas from Turkmenistan to India, an important show of Western support for the often derided project.
As reported in the FT, Dragon Oil said it has started talks with Turkmenistan over an investment in TAPI, a pipeline that will stretch 1,700km across Afghanistan and Pakistan.
“This [discussions on TAPI] has been ongoing for a long time. But now it’s very serious, things have been signed between the countries. That’s why we have shown our interest to go in,” Faisal Rabee Al Awadhi, general manager for Dragon Oil in Turkmenistan, told the FT at an oil and gas conference in Ashgabat.
Dragon Oil didn’t say what stage its negotiations with Turkmenistan were at, how much it was considering investing or when a final decision would be made. Other, bigger, Western oil and gas companies have decided not to invest in TAPI.
Dragon Oil already operates an oil field in Turkmenistan.
Turkmenistan’s state-owned gas company Turkmengas is the project leader for TAPI, which is slated to cost $10b.
Construction is supposed to start in December but it is a controversial project. Concern over security – the route crosses territory fought over by central government forces and the Taliban – has raised serious questions over whether the pipeline will ever be built at all.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 18 2015 (The Conway Bulletin) – Turkmenistan will expand its giant Galkynysh gas field by around 50% over the next few years, media reported quoting Ashirguly Begliyev, head of Turkmengas, giving gas projects to India and the EU a major boost.
Galkynysh forms the core of Turkmenistan’s gas production. Its main client is China although it wants to diversify its client base. The EU has been negotiating with Turkmenistan to try and organise for gas supplies to be sent west across the Caspian Sea, through the South Caucasus, Turkey and onto Europe.
India, likewise, has been working on a project that could see gas pumped from Turkmenistan across Afghanistan to Pakistan and finally to Indian consumers.
First, though, Turkmenistan needs to boost output at Galkynysh. Almost all of its current 60bcm of gas goes to China. A proportion of the next phase of Galkynysh’s development will also travel to China, but spare capacity is being built in.
“We are in talks with a consortium of Japanese companies and have also received proposals from Korean firms and from Petrofac company,” Reuters quoted Mr Begliyev as saying on which companies may be involved with the third phase development of Galkynysh.
Importantly, too, Galkynysh is vital for Turkmenistan’s own self image. It sees itself as an increasingly important regional energy player and has been looking to pull in more clients.
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(News report from Issue No. 257, published on Nov. 20 2015)