BMI View : Turkmenistan's actual gas production will remain limited by its limited export options. With Russia and Iran increasingly reducing imports of Turkmen gas and with other large-scale exports (notably TAPI) unlikely to materialise over our 10- year forecast period, the country's production will remain almost entirely dependent on domestic consumption growth and export levels to China.
|e/f = BMI estimate/forecast; Sources: EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||275.7||288.8||302.6||314.3||326.5||336.3||343.4|
|Refined products production, 000b/d||172.7||173.5||174.4||176.2||177.9||179.7||181.5|
|Refined products consumption & ethanol, 000b/d||154.1||164.9||174.8||185.2||196.4||208.1||220.6|
|Dry natural gas production, bcm||92.9||86.9||81.7||84.1||85.8||89.3||95.5|
|Dry natural gas consumption, bcm||24.7||25.5||26.0||26.8||28.1||29.5||31.0|
A renewed emphasis on international investment, along with developments by Turkmennebit, has lead to a slow but progressive increase in oil production. This will endure over the coming years. Larger production growth within our forecast period, however, is unlikely until a sustainable agreement is reached between Iran, Turkmenistan and Azerbaijan on the Caspian maritime border dispute.
The difficult business environment could, however, dissuade international investors, notably at a time of capital expenditure cut backs as oil prices remain low. For example, German company DEA Deutsche Erdoel is reportedly planning to relinquish its Caspian Sea concession as of October 2015 over frustration at excess bureaucracy, corruption and a lack of permit granting.
Despite its large gas production potential, Turkmenistan's actual production will remain limited by its export options. With Russia and Iran increasingly reducing imports of Turkmen gas, the country's production will remain almost entirely dependent on domestic consumption growth and export levels to China. With economic slowdown in China and Russia quitting Turkmen gas imports, we have recently reduced our gas production outlook for Turkmenistan over our 10-year forecast period.
Turkmenistan's level of gas consumption will take up an increasing proportion of produced gas as the country's exports stagnate on the back of falling exports to Russia and Iran. As production continues to ramp up, we believe that gas consumption will follow suit, although at a slower pace, to 41.44bcm in 2025 compared with an estimated 25.46bcm in 2015.
Turkmenistan's net gas export increase is inherently dependent on gas imports from China. We note increasing downside risks to our gas export forecast as a result of the China slowdown and the possible effects this will have on Chinese demand for natural gas from Turkmenistan over the coming years.
The TAPI pipeline will not be completed within our 10-year forecast due to a lack of funding, security challenges, and growing gas supply competition from Iran and LNG. This further limits options for Turkmenistan's gas export diversification efforts and puts into doubt upside risk to gas production over the forecast period.
Turkmenistan completed the USD2.5bn East-West pipeline on December 23. The pipeline connects Galkynysh and other fields in the east of the country to its Caspian coast, from where a proposed Trans-Caspian link could deliver gas to Azerbaijan and then to Europe. 'With the completion of East-West, cooperation with our European partners acquires new meaning,' President Kurbanguly Berdymukhamedov said. The 773km East-West link, which has a capacity of 30bn cubic metres a year, could also feed a proposed pipeline going along the coast through Kazakhstan to Russia.
The Turkmenistan Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for Turkmenistan including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's Turkmenistan Oil & Gas Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and competitive intelligence on the Turkmen oil and gas industry.
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