Deal ensures supplies of natural gas

World's second-largest field will bring benefits to China and Turkmenistan

The Chinese and Turkmen presidents announced on Sept 4 the completion of the first phase of the Galkynysh gas field, which will supply gas to China.

China National Petroleum Corporation also signed a new contract to import gas from Galkynysh - the world's second-largest gas field - a deal experts say will ensure China's growing natural gas supply and help Turkmenistan secure a stable buyer.

President Xi Jinping and his Turkmen counterpart Gurbanguly Berdymukhamedov attended the ceremony marking the start of operation of three processing plants at Galkynysh in South Turkmenistan.

Insiders told China Daily that each plant has an annual output of 10 billion cubic meters of gas.

A plant jointly developed by China National Petroleum Corporation will send its products entirely to China, and some gas from the other two plants is also likely to be sent to China.

Turkmenistan is China's largest supplier of natural gas, and China is the largest overseas market for Turkmenistan's natural gas.

Xi and Berdymukhamedov said on Sept 3 that the annual transport of 65 billion cubic meters of natural gas from Turkmenistan to China by 2016 will be ensured through the world's longest natural gas pipeline.

In 2009, the two nations put into operation a pipeline of more than 8,000 km to bring vital energy supplies through China's western region.

China imports about 40 billion cubic meters a year from Turkmenistan.

According to insiders, most of the newly added 25 billion cubic meters will be from Galkynysh.

China National Petroleum Corporation, the country's largest energy producer, announced on Sept 4 that it had signed an agreement with Turkmenistan to import 25 billion cubic meters of natural gas annually.

On Sept 4, Berdymukhamedov welcomed Xi when he arrived at the airport in Mary province.

An estimated 100,000 residents in traditional dress waved flowers along the road as Xi headed for the gas field. Energy cooperation with China has created 18,000 jobs for local people.

Li Li, research director at ICIS C1 Energy, an energy information consultancy in Shanghai, says the energy-rich Central Asian country has secured its best buyer for such an important energy source.

"The cooperation between the two countries will further ensure energy security in Central Asia and contribute to China's economic restructuring," she says.

Xi and Berdymukhamedov inspected the gas field, which has proven reserves of 4 to 6 trillion cubic meters of natural gas.

Galkynysh is "another fine example of bilateral energy cooperation for mutual benefits.

"The project will inject fresh and strong impetus into energy cooperation between the two countries," Xi said.

Berdymukhamedov said energy cooperation is an important part of the two nations' strategic partnership, which has been driving the development of the Central Asian region.

Turkmenistan is eager to enhance cooperation with China in areas such as natural gas exploitation and transmission, and global energy security, Berdymukhamedov added.

He also said that energy cooperation with China proves that his country's energy export diversification strategy is effective and successful.

China's annual natural gas consumption will reach 327.9 billion cubic meters by 2018, according to ICIS C1 Energy.

Imports are expected to more than triple by then.

"By Sept 3, the total quantity of China's natural gas import contracts were about 119.6 billion cubic meters (excluding the new contract of 25 billion cubic meters with Turkmenistan), which means that there is still a big shortage for China's natural gas imports," says Wang Ruiqi, a senior analyst with ICIS C1 Energy.

She says the new contract with Turkmenistan will ensure China's natural gas supply.

Turkmenistan holds the world's fourth-largest natural gas reserves and possesses vast reserves of oil. It is estimated that 400 million people in China benefit from natural gas from Turkmenistan.

Xi arrived in Turkmenistan on Sept 3. The Central Asia visit is his third international trip since taking office in March.