Turkmenistan Oil and Gas Market - Growth, Trends, and Forecasts (2023-2028)

Key Highlights

• Over the medium term, factors such as increasing investments and rising production of gas in the country are expected to boost the demand for the Turkmenistani oil and gas market during the forecast period.
• On the other hand, reluctance to open Turkmenistan up to foreign investment could restrain expansion plans in the sector.
• Nevertheless, many gas pipelines in the country are under construction and expected to be completed during the forecast period. These pipelines are expected to create new markets for natural gas exports and create an opportunity for the companies in the oil and gas sector.

Turkmenistan Oil & Gas Market Trends

Midstream Sector to Witness Significant Growth

• The midstream sector pertains to the transport and storage of crude oil and natural gas extracted. It includes infrastructure, such as crude oil and natural gas pipelines, gas treatment plants, natural gas liquefaction plants, and liquefied gas and regasification storage.
• Traditionally, the world has been more dependent on oil for its primary energy needs. However, in the past few years, the growing concerns over emissions have resulted in increased consumption of natural gas, resulting in heavy investment in natural gas processing plants.
• Turkmenistan is China's largest natural gas supplier, with nearly 31 billion cubic meters exported in 2021, far ahead of Russia (10 billion cubic meters per year). Thus, China is Turkmenistan's largest customer, ahead of Russia (8.5 billion cubic meters per year).
• Natural gas production increased in the country by 20.15%, from 66 billion cubic meters in 2020 to 79.3 billion cubic meters in 2021. Consumption of gas in Turkmenistan increased by 24%, from 29.6 billion cubic meters in 2020 to 36.7 billion cubic meters in 2021. Thus, the increasing production is expected to boost the growth of the pipeline infrastructure.
• In November 2021, Turkmenistan, Azerbaijan, and Iran signed a trilateral agreement on a gas swap in Ashgabat. According to the agreement, 1.5-2 billion cubic meters of gas will be delivered annually, with Turkmenistan supplying gas to Iran and Iran delivering an equal quantity of gas to Azerbaijan.
• In October 2022, Turkmenistan planned to double its natural gas exports to China to 65 bcm/year, due to the construction of 30 bcm/year fourth line of the China-Turkmenistan gas pipeline, which is currently under construction. An agreement was reached between the two countries regarding the second phase of the Galkynysh gas field in Turkmenistan, which has proven commercial reserves of approximately 2,800 billion cubic meters. At present, the China-Turkmenistan gas pipeline can supply 55 billion cubic meters per year, and when fully completed, it would supply 85 billion cubic meters per year. In 2009, 2010 and 2014, the first three lines of the pipeline were commissioned. The completion date of the fourth line has not yet been announced.
• Due to these factors and the ongoing investments and developments in the midstream sector in the country are expected to boost the market during the forecast period.

Increasing Investment to Drive the Market

• The Turkmenistani oil industry is highly dependent upon natural gas resources, particularly natural gas from the Caspian Sea and onshore fields. According to official figures, Turkmenistan's reserves of natural gas are estimated to be 71.64 billion tons of oil equivalent, with 53 billion tons of natural gas located in onshore fields and 18.21 billion tons of natural gas located in offshore fields.
• In Turkmenistan, there was a 15.3% increase in oil production in 2021, rising from 10.4 million tons in 2017 to 12 million tons in 2021. The consumption of oil rose by 4.2%, from 140 thousand barrels per day in 2020 to 146 thousand barrels per day in 2021.
• According to the British Petroleum (BP) Statistical Review of World Energy for 2021, Turkmenistan had 600 million barrels of proven oil reserves and 19.5 trillion cubic meters of proven natural gas reserves at the end of 2020.
• In December 2022, Turkmenistan and major South Korean companies discussed and signed several agreements regarding the implementation of new investments in Turkmenistan's gas chemical complex. The project includes the construction of a gas processing plant in the Balkan province to produce diesel and naphtha by Hyundai Engineering, LX International Corp., and Japanese Itochu Corporation. Daewoo Engineering and Construction will construct a urea plant capable of producing 1.155 million ton of urea in the Balkan province and a phosphorus fertilizer plant capable of producing 300 thousand ton of phosphorus fertilizer in the Lebap province.
• In July 2022, during the term of the agreement, Dragon Oil, a fully-owned subsidiary of the Government of Dubai, renewed its partnership agreement with Turkmen Oil until May 2025 for a period of 10 additional years, with a value of USD 1 billion. To support expansion and development programs, the company is expected to invest an additional USD 7-8 billion during the extension period of the contract. In order to reach 350 million barrels of crude oil production by 2035, future production levels would range between 60,000 and 70,000 barrels per day.
• Therefore, the country's oil and gas industry is expected to grow slightly during the forecast period due to increasing oil and gas production in the region and rising investments in the oil and gas sector.

Turkmenistan Oil & Gas Market Competitor Analysis

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