Wood Mackenzie has presented its long-term forecast for potential gas exports from Central Asia; Turkmenistan, Kazakhstan and Uzbekistan. The region has significant long-term export potential into multiple markets, however, its export outlook remains uncertain due to political, financial, competitive and technical challenges.
In order for Central Asia to realise its long-term potential of total exports of over 120 billion m3 by 2020, multiple phases of the giant South Iolotan (Galkynysh) project in Turkmenistan must be developed efficiently. 聽Delays to the production ramp-up at the South Iolotan field will have a substantial impact on the global gas market.
Stephen O鈥橰ourke, Senior Gas Supply Analyst for Wood Mackenzie, said, 鈥淐entral Asia鈥檚 geographic position and production potential makes it a possible supplier to multiple markets. Of all of the export markets available to Central Asia, Wood Mackenzie believes that the one with the greatest potential is China via the Trans-Asian pipeline. Our view is that China will require additional imports over and above Central Asia鈥檚 current contract of around 45 billion m3 by 2015. 聽We forecast that China will have around 50 billion m3 of gas demand in 2020 that needs to be satisfied by additional imports and Central Asian gas could play a key role is meeting this demand.鈥�
China
Delivering Central Asian volumes to China is not without challenges, as China will always balance domestic supply and its portfolio of imports, to avoid becoming too dependent on any one supplier. The volume of imported gas that China requires will be limited by the anticipated growth in unconventional Chinese production. 聽Central Asia will also face competition from other LNG and rival pipe importers to meet China鈥檚 contestable demand.
鈥淯ltimately, Central Asia鈥檚 long-term export potential depends on state-owned Turkmengaz being able to deliver the technically challenging South Iolotan (Galkynysh) project in Turkmenistan successfully. Turkmengaz must integrate and commission the project鈥檚 facilities, including three different gas processing plants - each of which has been built by separate contractors and uses different technologies - when they are handed over by project developers next year. 聽Any delays or disruption to the project will have a substantial impact on the global gas market, as in the absence of expected Turkmen gas, additional volumes of LNG would be required by China to meet its burgeoning gas demand,鈥� O鈥橰ourke expands.
Other potential export markets for Central Asian gas include Russia, Iran, India and Europe, however, export opportunities into these markets are limited and exports to Russia have actually fallen since the economic crisis. Wood Mackenzie expect to see limited growth in future exports due to reduced demand for Russian gas into Europe and Russia鈥檚 heavy investment in its own new upstream developments. 聽
Exports to Iran have risen incrementally over the last five years to 8 billion m3 in 2011 but it has limited potential as an export market for Turkmen gas. Growth will be constrained by the limited area of the Iranian market Turkmen gas can access and by Iran鈥檚 long-term plans to increase its gas self-sufficiency.
Conclusion
The TAPI pipeline would create export opportunities to Pakistan and India, but despite broad political support the project has to overcome substantial security and financial challenges. Finally there has been much discussion about the Trans-Caspian pipeline, which could offer Turkmen export independence into Europe. However, the practicalities of the project are challenging and without any significant progress in the last decade, the proposed Trans-Caspian pipeline has been overtaken by competing projects. 聽All of these factors lead us to believe that China presents the most realistic long-term option in terms of Central Asian gas exports.
Adapted from press release by