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Wednesday, 23 April 2014

Berdimuhamedov Shakes up the Energy Sector

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By Tavus Rejepova (04/23/2014 issue of the CACI Analyst)

On April 10, Turkmenistan’s President, Gurbanguly Berdimuhamedov, chaired a special meeting with the leaders of the oil and gas sector of Turkmenistan. Following a report by the Chairman of the Supreme Control Chamber, Batyr Atdayev, on the results of his agency’s audit of the Ministry of Oil and Gas Industry & Mineral Resources, the State Concerns Turkmennebitgazgurlushyk (Turkmen oil and gas construction), Turkmengaz, Turkmennebit (Turkmen Oil), the State Corporation Turkmengeologiya (Turkmen Geology) and the Turkmenbashy complex of oil refineries, the president reshuffled high level oil sector officials and set a number of priority tasks before these energy sector agencies.

The audit of these state agencies was conducted on President Berdimuhamedov’s orders. Following the findings, the President severely reprimanded the long-serving Deputy Chairman for Oil and Gas Baymyrad Hojamuhamedov for poor performance of his official duties and warned that if he fails to correct the flaws promptly, he will be relieved of his duties. The president also issued a reprimand to Tachberdi Tagiyev, General Director of the Turkmenbashy complex of oil refineries, for poor performance of his duties and shortcomings in his work. The deputy Chairman of the State Concern TurkmenOil, Hydyrberdi Mammetnazarov was fired for what has been officially reported as serious shortcomings in his work. Berdimuhamedov also demoted the Chairman of the State Concern TurkmenOil, Rejepgeldi Ilamanov, to the position Head of the Oil and Gas Department within the Cabinet of Ministers of Turkmenistan. Since the government has not released any information to the public, it is unclear what might have caused such a big reshuffle and reprimands in the energy sector.

Going forward, the president laid out the key priority tasks for each state oil and gas sector agency and also emphasized Turkmenistan’s commitments to completing its international pipeline projects. For instance, the Ministry of Oil and Gas and Mineral Resources of Turkmenistan was given specific instructions to develop strategic plans for the production of petroleum products and other manufactured goods that are in great demand in world markets. The president said that the Ministry should take all necessary measures for the development of the onshore fields and make long-term plans for the development of deposits in the Turkmen sector of the Caspian Sea. Certain foreign analysts claim that negotiations over the Southern Gas Corridor, which includes the Trans-Caspian project and remains a priority for Brussels, might soon be reactivated especially given the renewed Ashgabat-Baku relations and President Berdimuhamedov’s recent invitation to Ilham Aliev to pay an official visit to Turkmenistan.

The State Concern Turkmengas was tasked to fully complete by 2016 the 766 kilometer East-West gas pipeline that will have a capacity to carry 30bcm from the eastern to the western parts of the country. To meet international standards, it is necessary to build gas purification plants on the existing major gas deposits, said the president. Berdimuhamedov also noted that in 2014, Turkmengas needs to fully prepare all the documents associated with the project construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline and undertake the necessary work to sign these documents and begin construction of the pipeline in 2015. The President also stressed the importance of continuing work on the Trans-Caspian gas pipeline, completing the fourth line from Turkmenistan to China as scheduled until 2018, and moving forward with connections to Russia and Iran, as per earlier intergovernmental agreements.

To implement the framework agreements reached in September 2013 in Japan, the President instructed the Turkmengas chairman to sign the relevant contracts with Japanese companies before July 1, 2014, and begin construction of two plants for the production of gasoline from natural gas, each with a capacity of 600,000 tons per year. The signing of contracts will also include the construction of a plant for the production of diesel and jet fuel from natural gas with a capacity of 2.6 million tons, and a plant for the production of synthetic crude oil from the associated gas. Turkmengaz was also tasked to ensure the timely construction of a major facility to produce 381 tons of polyethylene and 81,000 tons of polypropylene per year. In addition, the president said, it is necessary to develop an integrated project for the development of the Galkynysh gas field and to ensure the timely completion of the second phase jointly with China’s CNPC for producing 30 billion cubic meters of natural gas by 2018.

The head of state also tasked the State Concern Turkmengaz to work effectively with scientists from the Institute of Oil and Gas under Turkmengaz and their colleagues from leading institutions in the region and other countries in the world. He noted that Turkmenistan’s scientists and experts should also participate in the annual Oil and Gas of Turkmenistan (OGT) conference. Speaking to the chairman of the Turkmen oil and gas construction concern, President Berdimuhamedov ordered the development of capacity for producing fiber out of quartz sand and basalt and supplying the manufacturing enterprises with high quality pipes, the arrangement of export to foreign markets, and setting up production of coating materials for ongoing construction facilities from mining solid materials. 

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