- Turkmenistan and Iran signed a contract for the annual delivery of 10 billion cubic meters of Turkmen natural gas, which Iran will then ship to Iraq.
- Iran will construct a new 125-kilometer pipeline between Iran and Turkmenistan to increase gas delivery capacity.
- Turkmenistan plans to increase its gas supplies to Iran to 40 billion cubic meters annually, aiming to boost revenue and meet rising domestic demand in Iran.
Turkmenistan and Iran signed a contract on July 3 for the delivery of 10 billion cubic meters of Turkmen natural gas per year, which Iran will then ship to Iraq.
Turkmenistan’s Foreign Ministry announced the deal but did not say what price Iran would pay for the gas.
The ministry’s statement said Iranian companies will construct a new 125-kilometer pipeline between Iran and Turkmenistan to expand the Central Asian country’s delivery capacity.
The ministry said Turkmenistan, whose economy is heavily dependent on the export of natural gas, also plans to increase its gas supplies to Iran to 40 billion cubic meters a year. However, no time frame was given.
ran has the world’s second-largest natural gas reserves and is the world’s third-largest producer of the fossil fuel, but rising domestic demand is curtailing its ability to export. Iran has faced natural gas shortages during the wintertime.
A gas swap with Turkmenistan will allow Iran to meet its export commitments.
Turkmenistan has been carrying out gas swaps with Iran for several years, but the volume has been relatively low at just a few billion cubic meters annually.
Revenue from natural gas exports account for the lion’s share of Turkmenistan’s budget.
Turkmenistan holds the world’s fourth-largest proven natural gas reserves, estimated at nearly 14 trillion cubic meters, according to statistics compiled by British Petroleum.
Turkmenistan currently produces about 80 billion cubic meters, meaning its production to proven reserve life is 166 years, an extraordinarily high number by global standards and one that implies Turkmenistan has the potential to produce significantly more.
However, Turkmenistan has had trouble finding markets for its massive natural gas reserves. Bordered by Russia, Uzbekistan, Iran and the land-locked Caspian Sea, Turkmenistan has no ability to directly ship liquefied natural gas (LNG) to world markets.
China is the country’s main customer for natural gas, accounting for about half of Turkmenistan’s annual production.
Turkmenistan is working on a pipeline to supply gas to Afghanistan, Pakistan, and India, where natural gas demand is expected to rise significantly in the coming decades.
Turkmenistan has for decades been considering shipping natural gas via a pipeline across the Caspian Sea to Azerbaijan and further on to Europe, but opposition by littoral states Iran and Russia, previously the largest natural gas supplier to Europe, has left the idea in limbo.
Europe’s attempt to cut its natural gas demand has also raised questions about the viability of the pipeline.
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