Giant Turkmen gas field could bring Nabucco into play

Independent advisory firm GCA says a gas field in Turkmenistan could hold the 4th largest gas deposits in the world. The field could hold enough to supply its current customers in Russia and China as well as become a reserve base for the Nabucco pipeline

Turkmenistan's already significant gas reserves seem much bigger after this latest estimate. GCA audit company has confirmed that the Yolotan field near the Afghan border holds between 4 and 14 Trillion cubic meters of gas.

That would make the gas field one of the largest in the world.  By comparison, Gazprom’s offshore Shtokman field in Russia's Arctic has reserves of 3.7 trillion cubic meters.  But Vitaly Ermakov, from Cambridge Energy Research Associates says production at Yolotan will require massive investment.

“The costs may be in the order of $150 per MCM and upwards. Because that a new area, new gas fields, not traditional a new region, and it would require not only creating the production infrastructure but the transportation infrastructure as well.”

In addition to existing customers like Russia and China, the EU may be particularly interested in investing.  Turkmen authorities claim the country could produce up to150 billion cubic meter of gas per year. That leaves 47 billion cubic meters up for sale once existing contracts are taken into account.

And that’s more than enough for the proposed EU-backed Nabucco pipeline which bypasses Russia, although Ermakov notes it will be available later rather than sooner.

“This discovery potentially may mean that theres sufficient resource base that can supply Nabucco in the future.  But it is not going to figure prominently as an actual source of supply for Nabucco until pretty late.  Its post 2015, maybe even later than then.”

Besides, Nabucco would have to be significantly longer to reach Yolotan. Gennady Shmal, Head of the Oil and Gas Union says that would add to the already vast cost of the project.

“Nabucco can hardly compete with Russian projects like South and Nord streams.  One kilometer of Nabucco costs twice as much as the Russian pipeline and with the current crisis it will be even more expensive.”

Experts say Nabucco will be profitable only if demand for energy grows in the EU, pushing up prices. If the global crisis lead to a long-term recession, gas deliveries via current routes  may be more than enough.