OREANDA-NEWS. BMI View: Gas-fired power will comprise close to all power generation in Turkmenistan over the next decade, given substantial domestic gas reserves and few gas export commitments. In order to leverage gas reserves, we expect the government to aim to expand the gas power sector and target electricity exports. That said, Turkmen plans to boost export revenues through a ramp-up in electricity exports to Afghanistan and Pakistan will face substantial headwinds, as security threats to power transmission infrastructure will remain elevated.

Latest Updates And Structural Trends

- Few gas export commitments beyond the Chinese market means Turkmenistan has few outlets for their gas production besides domestic power consumption. Our Oil & Gas team holds a negative outlook for the construction of the Turkmenistan-Afghanistan-Pakistan-India pipeline, underpinning this view.

- Russia decided to discontinue its gas imports from Turkmenistan in early January 2016. The contraction in Turkmen gas demand will have a negative impact on the country's economy, which relies on gas for 92% of its exports.

- Amid contracting gas demand, Turkmenistan aims to boost gas-fired generation in order to boost electricity exports. The main gas export destinations will be Afghanistan and Pakistan, but we are cautious on the strategy due to elevated security threats to the planned interconnection infrastructure.

- General Electric is reportedly planning to build a 1,586MW combined cycle gas turbine power plant in the Mary Velayat region in Turkmenistan. The goal of the project is to boost Turkmen electricity export capacity. As this project is still in its preliminary phases, we have not yet included it in our 10-year forecast period to 2025. In September 2013, the Turkmen President Gurbanguly Berdymukhammedov voiced an intention to tighten the free electricity ration for each citizen by 10 kilowatt hours (kWh) - from 35kWh to 25kWh. This would in turn weigh on electricity consumption growth in Turkmenistan.