Turkmengaz signs framework agreement with CNPC

Oil&Gas Materials 8 June 2012 15:32 (UTC +04:00)
A framework agreement on cooperation to transport an additional amounts of natural gas from Turkmenistan to China
Turkmengaz signs framework agreement with CNPC

Turkmenistan, Ashgabat, June 7 / Trend H. Hasanov /

A framework agreement on cooperation to transport an additional amounts of natural gas from Turkmenistan to China was signed between the state concern Turkmengaz and the China National Petroleum Corporation in Beijing, the Turkmen government said today.
According to the document, the volume of Turkmen natural gas delivered to China each year will reach up to 65 billion cubic meters.

'According to experts from both countries, the volume of Turkmen natural gas delivered to China will reach 30 billion cubic meters from early 2010 to July 1, 2012', the information said. 'This figure will rise up to 44 billion cubic meters by late 2012'.

"Our countries clearly understand that the smooth operation of power systems, including oil and gas pipelines is one of the major challenges of ensuring sustainable economic development in different regions of the world," Turkmen President Gurbanguly Berdimuhamedov said at the meeting with Chinese President Hu Jintao in Beijing.

The same day, deputy chairman of the Turkmen cabinet of ministers Yagshygeldy Kakayev held the talks with the chairman of the CNPC board of directors Jiang Zemin.

CNPC has been engaged in the exploration and development of the fields included in the contract area of Bagtyyarlyk since 2007 on the basis of a Production Sharing Agreement (PSA) signed with the State Agency for Management and Use of Hydrocarbon Resources under the Turkmen President.

Bagtyyarlyk serves as a resource base for the transnational gas pipeline Turkmenistan -Uzbekistan-Kazakhstan-China.

Hundreds of infrastructure projects were built on the route of the energy main line. In particular, a gas processing plant, built by the CNPC Corporation in the Samandepe field ensures the high quality of marketable gas sent to the pipeline.

Its design capacity is calculated on an annual cleaning and drying of five billion cubic meters of hydrocarbons, as well as producing 180,000 tons of hydrocarbon condensate.

Several operations were conducted to supply fuel to the plant. The fund of the exploitation wells has been prepared. Gas gathering points, compressor stations, gas metering units, engineering and external communication networks have all been built.

Besides the construction of various gas field facilities, geophysical surveys were conducted using a three-dimensional method of exploration seismology.

The construction of the second gas processing plant with a capacity up to nine billion cubic meters of fuel per year was launched in the contract area of Bagtyyarlyk. It will serve a group of fields at Altyn Asyr.

"A new bilateral document signed today demonstrates the commitment of the parties to the consistent strengthening of partnership that meets not only national development priorities of the two friendly countries having huge potential for fruitful cooperation, but also the interests of other countries in the region," the Turkmen government said.

Turkmenistan is China's major gas supplier in Central Asia. The gas pipeline was commissioned through Uzbekistan and Kazakhstan in December 2009. The project was the first energy corridor for China, designed to import foreign natural gas.

The design capacity of the Central-Asian gas pipeline is 30 billion cubic meters. It was built by CNPC. This allowed Turkmenistan to expand its sales markets, limited by the supplies to Russia and Iran. Ashgabat and Beijing have recently agreed to increase the capacity of supplies two-fold. The document was signed in late 2011 within Turkmen President Gurbanguly Berdimuhamedov's visit to China.

CNPC operates in Turkmenistan on the basis of the exclusive Production Sharing Agreement (PSA) to develop the onshore field of Bagtyyarlyk in the Lebap region of the country. The Turkmen government signs all other PSAs with foreign companies only on offshore blocks in the Caspian Sea.

In early March, China launched the construction project of the eastern part of the second branch of the East-West gas pipeline in the special administrative region of Hong Kong. This will eventually transport raw materials from Central Asia and in particular from Turkmenistan.

Chinese media previously reported that the new gas pipeline will run along the seabed between the city of Shenzhen in the south of the continental part of China and Hong Kong. This project is part of the second branch of the East-West gas pipeline through which natural gas is supplied from Central Asia to China's two economic areas in the deltas of the Yangtze and Pearl Rivers.

This is underwater gas pipeline will have the largest diameter in China. Its length is 29.04 kilometres. Up to six billion cubic meters of natural gas per year may be delivered through it.

People's Daily stressed that the gas pipeline will be jointly built by China's oil and gas joint stock company "PetroChina" and "Hong Kong Castle Peak Power" company. "PetroChina" will receive 60 percent of the joint venture, while Hong Kong's company will receive the remaining 40 percent.

The East-West gas pipeline has a backbone pipe and eight secondary ones with a length of 8704 kilometres. The pipeline passes through 14 provinces, autonomous regions, cities and special administrative regions and may supply 30 billion cubic meters of natural gas annually.