OREANDA-NEWS. July 14, 2011. A new landmark event in effective development of the country’s rich hydrocarbon reserves was the launch of commercial gas production on the Turkmen shelf of the Caspian Sea. As was reported, the industrial complex including the gas processing plant and gas terminal, which will henceforth receive natural gas produced in offshore deposits in the Turkmen sector of the Caspian Sea by one of Turkmenistan’s foreign partners – the Malaysian company Petronas, was put into operation near Kyyanly settlement.

This remarkable event, which was attended by President of Turkmenistan Gurbanguly Berdimuhamedov and Prime Minister of Malaysia Mohd Najib bin Tun Haji Abdul Razak, became new vivid evidence for the success and effectiveness of Turkmenistan’s energy strategy, an important aspect of which is the full-scale use of rich hydrocarbon resources of the country that rightfully ranks among the world’s energy powers.

Addressing the ceremony of putting the new facilities into operation, President Gurbanguly Berdimuhamedov said that the launch of commercial gas production in the Turkmen shelf in the Caspian Sea was of great importance not only for the national economy but also for Turkmenistan’s strategy for ensuring global energy security and international cooperation meeting the interests of all states and nations.

The fact that the implementation of this large-scale energy infrastructure project that will contribute to enhancing the country’s gas export potential demonstrates once again attractiveness of the Turkmen sector of the Caspian Sea for foreign companies willing to cooperate with Turkmenistan in developing its huge hydrocarbon resources is quite significant.

According to the forecasts of Turkmen geologists and leading foreign experts, given the area of Turkmenistan its Caspian sector contains more than a half of oil reserves and about a quarter of natural gas reserves. Huge hydrocarbon resources in the sea depths of Turkmenistan, the open door policy and strategy for mutually advantageous international cooperation pursued by the Government of Turkmenistan and the favourable investment climate created in the country facilitate involving world-renowned companies in the major projects for development of oil and gas deposits in the Caspian Sea.

Practical evidence for this is the successful implementation of the investment project for exploration and development of the offshore Block 1 in collaboration with Malaysia’s largest state-owned company Petronas, which became the first foreign partner of independent Turkmenistan in the development of offshore deposits in the Turkmen sector of the Caspian Sea.

The Production Sharing Agreement on the contractual territory Block 1 was signed between the Petronas Company and the Government of Turkmenistan in July 1996. In the same year Petronas Carigali (Turkmenistan) registered in Turkmenistan received the license to explore and extract hydrocarbon resource and became the operator of this major investment project.

For 15 years that passed since the signing of the Production Sharing Agreement for the contractual territory Block 1 the complex of seismic and drilling operations have been carried out and such large oil and gas fields as Magtumguly, Ovez, Mashrykov, Diyarbekir and Garagol Deni, where large hydrocarbons reserves were discovered, have been prepared for production. As of today, they produce about 75 million tons of crude oil and condensate and 245 billion cubic meters of natural gas.

Modern offshore and on-land infrastructure, including the plant for assembling marine structures designed for carrying out oil production operations in the offshore areas, is built in the contractual territory, in the development of which has over USD 4.5 billion have been invested. The fact that the construction of this assembly plant opened up the opportunities to develop heavy mechanical engineering and construction of offshore structures in Turkmenistan. The plant also provides services to offshore drilling rigs in the Caspian region that will significantly expand the possibilities for cooperation at the regional level. In the future this will allow Turkmenistan to become one of the leading centres for repair and assembly of marine structures in the Caspian region.

In 2006 the Petronas Carigali (Turkmenistan) Company started pilot commercial production in Diyarbekir oil field that marked an important stage of partnership between the Government of Turkmenistan and the Malaysian company.

Given the substantial value of huge proven gas fields in the Block 1 contractual territory, the Ministry of Oil and Gas Industry and Mineral Resources of Turkmenistan and Petronas Carigali (Turkmenistan) signed the basic agreements in March 2007 to implement the projects for development of gas fields and construction of the gas processing plant and gas terminal and start selling natural gas.

The ceremony of laying the foundation stone of ground-surface facilities under this project, which initiated the development of gas deposit, took place with the participation of President Gurbanguly Berdimuhamedov in Kyyanly in June 2007. The project implementation was continued with construction, installation and commissioning of the Magtymguly-A collector platform, the gravity base offshore platform and the Magtymguly-A drilling platform. The facilities are connected with the 73-km offshore gas pipeline, condensate pipe and monoethylene glycol pipe to supply hydrocarbon resource to the gas processing plant.

The gas terminal and gas processing plant in Kyyanly equipped with high-tech units and systems will treat and prepare for export of up to 5 billion cubic metres per year at the initial stage and up to 10 billion cubic metres per year in the future. After gas is treated in compliance with the international quality standards, it is supplied to the gas transportation system of Turkmenistan which is currently able export ‘blue fuel’ in several directions.

In addition, it is planned to produce 2.4 million tons of gas condensate per year at the first stage in offshore fields developed in collaboration with the Petronas Carigali (Turkmenistan) and up to 4 million tons per year in the future.

Putting the industrial complex in Kyyanly into operation significantly expands integrated operations and the work on the development of offshore fields in Turkmenistan. Evidence for this was the Gas Sales and purchase Agreement signed between the State Agency for Hydrocarbon Resources Management and Use under the President of Turkmenistan, the Turkmengaz State Concern and Petronas Carigali during the visit of Prime Minister Mohd Najib bin Tun Haji Abdul Razak to Turkmenistan. This Agreement will ensure the high profits from exports of gas produced in the Block 1 contractual territory.

Evaluating highly the investment activity the Petronas Company that has invested USD 4.5 billion investing in the development of offshore fields of the Caspian Sea, President Gurbanguly Berdimuhamedov emphasized that partnerships with this company illustrated mutually advantageous cooperation of Turkmenistan with foreign investors in the development of oil and natural gas.

Currently, besides Petronas such well-known companies as Arabian Dragon Oil, German RWE and Winterschall, Indian ONGC, Austrian Maersk, Russian Itera and Zarubezhneft partner with Turkmenistan in the implementation the oil projects on the Turkmen shelf. Also, a number of foreign oil companies show interest in developing license blocks in the Turkmen sector of the Caspian Sea.

Furthermore, CNPC and Barren involved in development of on-land deposits, considerably contribute to developing hydrocarbon deposits in Turkmenistan.

Thus, Turkmenistan’s energy strategy aimed at large-scale international mutually advantageous cooperation and based on secured and guarantees access to energy sources and transit is successfully implemented for the benefit of our country and the whole humanity.

Today, Turkmenistan is becoming a major energy exporter on large world market through the effective energy policy pursued by President Gurbanguly Berdimuhamedov. Tremendous natural gas resources as well as the state strategy for diversifying energy transit open up the vast opportunities for natural gas exports eastwards and westwards. ‘Blue fuel’ from Turkmenistan is exported China across the territories of Uzbekistan and Kazakhstan and the Islamic Republic of Iran via the new pipelines built in these countries. The ceremonies of putting these pipelines into operation were attended by the leaders of these states. Traditional importer of Turkmen gas is the Russian Federation. In addition, the work on the implementation of the Turkmenistan-Afghanistan-Pakistan-India gas pipeline project is under way. The option of direct natural gas supplies to Europe are under consideration.

Enhancing the potential to export energy to world markets, Turkmenistan has launched a number of the major projects aimed at developing the gas transportation system and accelerating bringing into service of new deposits. These include the project of the East-West gas pipeline that will connect the largest gas fields in the eastern region of the country with the Caspian region. One of them is the Southern Yoloten-Osman field recognized as the second largest gas field in the world. The preparations of this field for commercial production are under way. It is being developed by the Turkmengaz State Concern in collaboration with the companies from China, Korea and the UAE.

All these factors, certainly, contribute to strengthening the country’s economic potential and arouse keen interest of foreign oil companies in establishing large-scale cooperation with Turkmenistan and guarantee the high profitability of the projects which involve foreign investors.

The fact that Turkmenistan of the epoch of new Revival has launched commercial gas production in its Caspian sector will certainly give a new impetus to the willingness of the world’s leading companies specialising in exploration and development of offshore ‘blue fuel’ deposits to collaborate in developing rich hydrocarbon reserves in the country, which will henceforth become richer through the discovery of new offshore oil and gas deposits.