ASHGABAT (Reuters) – The former Soviet republic of Turkmen’stan said on Tuesday it would pipe four billion cubic meters (bcm) of gas direct to Iran in 1998 in an apparent bid to break Moscow’s decades-old monopoly on Turkmen’stan’s natural gas exports.
Turkmen’stan will deliver the gas via a new 125 mile pipeline linking the two neighboring states–to be opened by the Turkmen and Iranian presidents in mid-December.
"A delivery (to Iran) of four billion cubic meters of Turkmen gas will be made next year according to agreemen’s between the two states," a spokesman for Turkmen’stan’s oil and gas ministry told Reuters.
The gas will be sourced from Turkmen’stan’s Korpedzhe gas field and exported to Iran’s northeast town of Kurt-Kui.
Iran funded 80 percent of the pipeline’s $190 million costs–and work started last year.
Volumes are expected to double to 8.0 bcm by 2006 and Turkmen officials have said Iran has pledged to buy Turkmen gas for the next 25 years.
The volume is small beer considering the desert state’s estimated natural gas reserves of 21 trillion cubic meters.
But the pipeline is groundbreaking in that it ends Russia’s monopoly on gas export routes for the desert state.
"This is so far the only project which has been realized in the search for export routes for Turkmen gas to international markets," the spokesman’said.
Oil and gas companies of all stripes have flocked to former Soviet republics around the hydrocarbon-rich Caspian basin–estimated to contain 100-200 billion barrels of oil.
But getting the landlocked region’s energy wealth to markets in Europe and Asia has been stymied by inadequate capacity in Russian-controlled pipelines.
Gas pipelines linking Central Asia to Europe are controlled by Russian gas monopoly Gazprom –while the oil pipeline network is controlled by pipeline monopoly Transneft.
Stephen O’Sullivan–oil and gas analyst at MC Securities in London–said: "It’s important as it shows that alternative pipeline routes can be built.
"It also sees Turkmen’stan’s political independence boosted," he said.
Last month US oil group Unocal Corp announced a consortium to build a $2 billion gas pipeline from Turkmen’stan to Pakistan through war-torn Afghanistan.