Today at Gastech 2012, Wood Mackenzie presented its long-term forecast for potential gas exports from Central Asia; Turkmenistan, Kazakhstan and Uzbekistan.
Wood Mackenzie recognises the region’s significant long-term export potential into multiple markets, but says its export outlook remains uncertain due to political, financial, competitive and technical challenges.
Wood Mackenzie says that in order for Central Asia to realise its long-term potential of total exports of over 120 billion cubic metres (bcm) by 2020, multiple phases of the giant South Iolotan (Galkynysh) project in Turkmenistan must be developed efficiently. Delays to the production ramp-up at the South Iolotan field will have a substantial impact on the global gas market.
Stephen O’Rourke, Senior Gas Supply Analyst for Wood Mackenzie, says: “Central Asia’s 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’s current contract of around 45 bcm by 2015. We forecast that China will have around 50 bcm 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.”
The presentation highlights that delivering Central Asian volumes to China is not without challenges, as O’Rourke explains: “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. Central Asia will also face competition from other LNG and rival pipe importers to meet China’s contestable demand.
“Ultimately, Central Asia’s 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’s 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. 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,” O’Rourke expands.
Wood Mackenzie’s analysis also discusses Russia, Iran, India and Europe as potential export markets for Central Asian gas, concluding that export opportunities into these markets are limited: “Central Asian exports to Russia have fallen significantly since the economic crisis. We see limited growth in future exports due to reduced demand for Russian gas into Europe and Russia’s heavy investment in its own new upstream developments.
“Exports to Iran have risen incrementally over the last five years to 8bcm in 2011 but we believe it too 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’s long-term plans to increase its gas self-sufficiency,” O’Rourke says.
O’Rourke concludes: “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. All of these factors lead us to believe that China presents the most realistic long-term option in terms of Central Asian gas exports.”
LNG World News Staff, October 11, 2012; Image: Wood Mackenzie