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Turkmenistan Bilateral Trade Oil and Gas

Turkmenistan’s Gas and Türkiye’s Plans to Become a Gas Hub

By Robert M. Cutler A series of ongoing political consultations between Turkmenistan and Türkiye continued on 25–26 April, as a Turkmen delegation led by Deputy Minister of Foreign Affairs Ahmet Gurbanov visited Ankara, hosted by Turkish counterpart Burak Akçapar. Beyond the regular bilateral agenda of political-diplomatic, trade-economic and cultural-humanitarian cooperation, the two sides emphasized the implementation of bilateral agreements reached at the third Antalya Diplomatic Forum in early March, particularly the prospects for cooperation in the energy sector. On 1 March 2024, Turkmenistan and Türkiye signed two documents — a memorandum of understanding (MoU) and a letter of intent — aimed at strengthening cooperation in the natural gas sector. In theory, this seems to be a positive development for the two countries as well as for Europe. The two possible routes for Turkmen gas to reach Türkiye and Europe are (1) via the Caspian Sea and Azerbaijan, and (2) through Iran's existing pipeline infrastructure via a gas swap agreement. Neither one is likely to happen soon. The project to export Turkmen gas to Europe through a shore-to-shore high volume pipeline, at 31 billion cubic meters per year (bcm/y) is no longer alive after various parties have failed to realize it over the past quarter-century. It was bruited when it was announced that Turkmen President Serdar Berdimuhamedov planned to visit Brussels in late 2023 (which ended up not happening) and definitively killed when the initiative by American company Trans-Caspian Resources (headed by a retired U.S. ambassador to Turkmenistan) failed to persuade Ashgabat to construct short low-volume (8–11 bcm/y) "Platform Option" pipeline in the Caspian Sea. Gas "swaps" and Türkiye’s ambitions The idea of a "Turkish gas hub" arose from Russia's search to depoliticize trade between Gazprom and European firms by facilitating a platform where Gazprom's origination of the gas would be obscured and anonymized. Buyers and sellers could meet through Turkish intermediation. Türkiye, however, seeks to draw advantage by imposing the condition of long-term contracts with Gazprom for gas sales at below-market prices. This would guarantee a role for the Turkish intermediaries and, moreover, ensure for them a profit margin through mandatory service fees. "Swap" operations mean an exchange of gas amongst Turkmenistan, Iran and Azerbaijan; however, this would involve only a few billion cubic meters. Even if all participants agree, several questions still remain: Will swap transactions be profitable, given the price of gas in Europe? Even if Iran agreed to a Turkmen gas swap, would Tehran execute the agreement in good faith? In fact, Tehran would prefer to offer its own gas to Turkish and European markets, rather than transit competitive Turkmen gas through his territory. In addition, the gas that Azerbaijan produces for export already has contracted buyers under long-term agreements. Azerbaijan would be interested in the Turkish gas hub only if it should in future produce surpluses of gas that cannot be sold under long-term contracts. Then, such surpluses could be sold at a gas hub under short-term contracts, assuming that transit and profitability are...

Russia Transport Kazakhstan Central Asia Export/import Industry Germany Oil and Gas

Russian Comments Put Kazakhstan’s Oil Transit to Germany Under Threat

Russia has warned Kazakhstan about the possible suspension of Kazakh crude oil transshipment to Germany through the Druzhba oil pipeline system. The stated reason is the debt of Polish pipeline operator PERN, according to a report by Reuters. Reuters, citing people familiar with the matter, claims that Russia's Transneft has warned its Kazakh partner KazTransOil about the suspension of oil deliveries to the Schwedt refinery. The reason for this demarche is the outstanding debts of Polish state pipeline operator PERN. If the Polish company doesn't pay for the services of oil acceptance and transfer at the Polish transit point Adamova Zastava on the border with Belarus by June, the transit will be stopped. The amount of the debt is unknown. PERN explained its version of the situation by citing western sanctions against Russia. Payment of money to the Russian side can lead to violations of the sanctions regime. According to comments made by the Kazakh Ministry of Energy, the Kazakh government itself looks at the possibility of transit suspension very negatively. KazTransOil said that the plan of deliveries to Germany remains unchanged, and that negotiations with all participants of the process are underway. Curiously, the Ministry of Energy denied the Reuters report, claiming that "the information does not correspond to reality." In early April it was reported that the Kazakh side intends to supply 1.2 million tons of oil to the Schwedt refinery by the end of the year. This would not be the first case involving a cessation of Kazakh oil transiting Russian territory. Earlier, there were repeated problems with the Caspian Pipeline Consortium (CPC) terminal in Novorossiysk, Russia, on the Black Sea. Some analysts believe that Russia uses oil transportation as an instrument to apply pressure to the Kazakh government.

Oil and Gas

Tatneft to Explore for Hydrocarbons in Kazakhstan

Kazakhstan’s national oil and gas company, KazMunayGas, and the Russian Tatneft will create a joint venture for geological exploration for hydrocarbons at the Karaton Podsolevoy subsoil area in the Atyrau region in western Kazakhstan, KazMunayGas has announced. The two companies signed agreements for the project on February 21st in the Russian city of Kazan. Tatneft is headquartered in the nearby town of Almetyevsk. According to the agreements, KazMunayGas is selling Tatneft a 50% stake in Karaton Operating Ltd., the operator of the Karaton Podsolevoy project. In June 2023 KazMunayGas received a contract to explore and produce hydrocarbons at the Karaton Podsolevoy area and in September 2023 registered a private company, Karaton Operating Ltd., to implement the project. In November 2023, KMG transferred the subsoil use right to Karaton Operating Ltd. “[Kazakhstan’s president Kassym-Jomart Tokayev] set the task of attracting foreign investment in the raw materials sector and geological exploration,” commented Magzum Mirzagaliyev, chairman of the board of KazMunayGas. “In this regard, we held negotiations with a number of investors and are pleased that our partner in the Karaton Podsolevoy project has become the Tatneft company, which has extensive experience in the field of geological exploration and development of oil and gas fields.” Mr Mirzagaliyev added that drilling of the first exploration well with a depth of 5,500 meters is planned for 2024.

Cost of Living Oil and Gas

Tajikistan Struggling With Cost of Imports

Compared to 2022, Tajikistan imported 164,200 tons more oil products in 2023, an increase of 11.6%, Safarali Qurbanzoda, the Anti-Monopoly Service's first deputy head has announced. “According to the customs office, in 2023, 1,413,000 tons of oil products worth $892 million were imported into the republic with an average price of $631 dollars per ton. More precisely, 436,500 tons of diesel fuel, 348,100 tons of gasoline, 411,000 tons of liquefied gas and 218,000 tons of petroleum products were imported,” he stated at a press conference. Qurbanzoda added that 25.9 % of these products came from Kazakhstan, and 0.7 % from Russia, with the cost of purchases increasing by 20%. Prices at gas stations in Tajikistan also increased throughout 2023. Buses in Khojand, the second-most populous city, were stopped in October 2023 because of a sharp spike in the cost of diesel fuel, according to a report from the regional portal, SugdNews. The anti-monopoly agency attributed the rise in domestic fuel prices to “increased prices in exporting countries.”

Oil and Gas

Kazakhstan And Hungary To Cooperate On Petrochemicals

The Hungarian oil and gas company MOL Group has shown interest in a joint petrochemical project using natural gas from Kazakhstan’s Rozhkovskoye gas condensate field, the Kazakh national oil and gas company KazMunayGas has announced. The potential partnership was discussed at a February 7th meeting in Budapest between KazMunayGas’ deputy chairman, Serikkali Brekeshev, Hungary’s deputy minister of foreign affairs, Levente Magyar, and executives from MOL Group. The parties discussed cooperation in the field of petrochemicals and gas processing, including the development of the Rozhkovskoye field, supplies of Kazakh crude oil and gas condensate. MOL Group expressed interest in the supply of Kazakh oil for processing at Hungarian oil refineries, as well as importing gas condensate from the Rozhkovskoye field. The Rozhkovskoye gas condensate field was put into commercial operation in the West Kazakhstan region in December 2023. By 2040, the field is expected to produce 14.2bn cubic meters of natural gas and 7.1m tons of condensate. The field is operated by a joint venture of KazMunayGas (50%), MOL Group (27.5%), and China’s Sinopec (22.5%).

Oil and Gas

Turkmenneft Building Closer Relationship With UAE’s Dragon Oil

On February 6th the management of Turkmen state company Turkmenneft met with representatives of the Emirati oil & gas company Dragon Oil. The delegation from Dragon Oil was led by the company's by CEO Ali Rashid Al-Jarwan, the International Information Center of Turkmenistan reported. The two sides discussed prospects for further cooperation in the oil & gas sector, taking into account their combined experience and Turkmenistan's large-scale plans for developing its fuel and energy complex.