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Turkmenistan to step up oil and gas production?

Investors in the oil and gas industry would do well to turn their attention in the direction of Turkmenistan, as an announcement reported by TDH - the nation's state information agency - indicates it could soon become a larger player in the sector. It seems that the country could soon be significantly increasing its oil and gas production.

This announcement came from the nation's president, Gurbanguly Berdymukhammedov, who has "instructed fuel and energy sector chiefs to step up measures to boost output and exports of liquefied gas", according to TDH.

The president also asked for the companies "to diversify supplies of Turkmen energy along new routes, to carry out planned projects to explore and develop natural resources and new fields, process raw hydrocarbons and speed up the vitally important strategic project to build the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline".


How will this change Turkmenistan's oil and gas sector?

These requests seem likely to cause a jump in the production of oil and gas in Turkmenistan, but by how much? Well, the state's target is to increase gas production by nine per cent. This would raise the total it produces to 83.8 billion cubic metres (bcm). It will also aim to produce 2.9 per cent more oil, for a total of 11.11 megatonnes (mt).

This seems like a large boost for the country, but it is actually in line with Turkmenistan's current growth rates. In 2014, for example, the nation's gas production was increased by 11.1 percent, meaning that 2015's total will actually be a slight slowdown in terms of growth. Similarly, the oil production rate increased by 3.2 per cent last year.

So does this mean that oil and gas production is set to slow down in the near future, as growth decreases? Far from it. After all, Turkmenistan's oil and gas production is still growing. The slight slowing down is a recognition of the industry's rapid rise in 2014, with Turkmenistan setting realistic goals for this year.

Furthermore, Turkmenistan has huge reserves of both oil and gas. Current estimates put the nation at owning around 600 million barrels of proven crude oil reserves as of January 2014, while the country is the fourth largest natural gas reserve holder in the world.


What does this mean for the oil and gas industry?

On the whole, this is a good thing for the overall industry. After all, Turkmenistan does not utilise all of its gas and oil. Instead, it exports a vast amount of it. The growth in production, therefore, indicates a growth in the amount of the materials that the country exports; something that is backed up by president Berdymukhammedov's aims.

In total, Turkmenistan will be aiming to export 48 bcm of gas in 2015. While it has not announced the plans for oil exports, it seems likely these will rise as well in tandem with production.

The nation is very welcoming of foreign investors. Its two oil refineries, the Seidi and Turkmenbashi, typically operate at 50 per cent capacity while overseas firms export the crude. These companies can also participate in production-sharing agreements or joint ventures with the main oil producer in the region: the state-owned Turkmenneft.

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