China will lend energy-rich Turkmenistan $3 billion to develop its vast South Yolotan natural gas field, Turkmen state media reported Saturday. The loan marks a key step in Chinese efforts to secure long-term energy supplies from ex-Soviet Central Asia and will likely loosen Russia's grip over Turkmenistan's gas exports.
Work on a 4,300-mile (7,000-kilometer) pipeline from Turkmenistan to China with the capacity to deliver 52 billion cubic yards (40 billion cubic meters) of gas per year is expected to be finished by the end of the year.An audit last year by British company Gaffney, Cline and Associates found that the Yolotan field near the Afghan border likely holds 7.85 trillion cubic yards (6 trillion cubic meters) of gas, making it one of the five largest deposits in the world.
``The deposits at Southern Yolotan alone, if it produces 50 billion cubic meters of gas annually, could provide enough gas to supply any state for 100 years,' Turkmen President Gurbanguli Berdymukhamedov told a Cabinet meeting Friday.
The pledge of financial support from China comes amid a strain in relations between Turkmenistan and Russia, which has bought most of the Turkmen gas for onward sale in Ukraine and Europe. Earlier this year, Russia moved to reduce its gas imports from Turkmenistan because of plunging demand and prices in Europe. The spat with Russia will likely encourage Turkmenistan to diversify its exports to China and the West.
Turkmenistan has committed to exporting 65 billion cubic yards (50 billion cubic meters) per year to Russia under a 25-year contract, and it also has agreed to provide China with 52 cubic yards (40 billion cubic meters) annually beginning late next year. An additional 10 billion cubic yards are sold annually to Iran.
Some international experts voiced doubt that Turkmenistan could meet all its supply obligations, but Berdymukhamedov said the nation has enough gas to supply all buyers. He said Friday that Turkmenistan currently produces 105 cubic yards (80 billion cubic meters) of gas per year, and Malaysian company Petronas and other foreign companies produce another 26 cubic yards (20 billion cubic meters) of gas in the Turkmen sector of the Caspian Sea. Turkmenistan estimates its total reserves at more than 26 trillion cubic yards (20 trillion cubic meters), but international experts have questioned that figure.
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