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DE RUEHAH #1071/01 2380850
ZNR UUUUU ZZH
P 260850Z AUG 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 3349
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
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RUCNDT/USMISSION USUN NEW YORK 1105
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UNCLAS SECTION 01 OF 02 ASHGABAT 001071 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SCA/CEN; EEB; NEA/IR 
ENERGY FOR EKIMOFF/BURPOE/COHEN 
COMMERCE FOR EHOUSE 
 
E.O. 12958: N/A 
TAGS: EPET PGOV EINV TX
SUBJECT:  TURKMENISTAN:  CNPC ON SCHEDULE TO SHIP GAS TO CHINA 
 
REF:  ASHGABAT 815 
 
¶1.  (U) Sensitive But unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  Chinese National Petroleum Corporation (CNPC) 
recently announced that its Amu Darya project had been connected to 
the Uzbek section of the Central Asia - China pipeline.  CNPC added 
that the inter-border connection will contribute to ensuring 
scheduled gas supplies to China by 2010.  The announcement shows 
that foreign energy companies can and are doing business in 
Turkmenistan, especially if they are willing to build pipelines. 
END SUMMARY. 
 
¶3.  (SBU) The Amu Darya project or Bagtyarlyk contractual territory, 
as it is referred to by the Turkmen Government, is a group of fields 
being developed by CNPC under a production sharing agreement 
(reftel).  According to its production sharing agreement, CNPC is 
developing gas fields located in the contractual territory that 
includes the large Samandepe and Altyn Asyr fields, constructing two 
gas processing plants, and building a 78-kilometer pipeline to 
transport natural gas from the Samandepe and Altyn Asyr fields to 
the Uzbek section of the Central Asia - China gas pipeline.  CNPC 
plans to complete construction of a gas processing plant with a 
capacity of five bcm of gas per year located at the Samandepe gas 
field by the end of 2009.  So far, 84 percent of the work has been 
completed.  The company plans to finish a second gas processing 
plant with a capacity of eight bcm of gas per year by the end of 
¶2010.  The Amu Darya project will deliver 13 bcm of gas annually to 
the Central Asia - China pipeline when all the gas production and 
transportation facilities come on stream. 
 
¶4.  (SBU) ATG, a joint venture between CNPC and Uzbekneftegaz, began 
the Uzbek section in the middle of 2008, not far from the Uzbek city 
of Bukhara.  Construction was begun out on two portions 
simultaneously.  The first portion stretches toward Kazakhstan and 
is not completed, and the second portion, which was recently 
connected to the Amu Darya project, stretches toward Turkmenistan. 
 
¶5.  (SBU) Separately, gas produced by the Turkmengaz State Concern 
and bound for China will be transported to the Uzbek border through 
a Turkmen section of the Central Asia - China pipeline.  This leg 
will be 188 kilometers long and will utilize 56-inch pipes, which 
makes it capable of carrying more than 30 bcm annually. 
Stroytransgas, a Russian company hired by Turkmengaz to construct 
the Turkmen section, has completed welding on a 76-kilometer portion 
of the Turkmen section.  Stroytransgaz still has much work to do, 
including the pipeline section crossing the Amu Darya River, which 
is the most complicated part of the Turkmen section and will be laid 
beneath the river bed, according to a Ministry of Oil and Gas 
official.  The construction of another technically sophisticated 
facility -- a compressor station to be built by ENEX (Belgium) -- is 
still under way.  There are plans to transport 27 bcm of gas 
annually through the Turkmen section. 
 
¶6.  (SBU) Supplies to China are planned to start in December 2009 
with volumes not exceeding 4-5 bcm of gas over the first year.  It 
appears the first 4-5 bcm of gas will come from the CNPC-operated 
portion of the Samandepe gas field, through the CNPC-built 
78-kilometer pipeline running to the Uzbek border.  As a result, 
there will be no need for Turkmengaz-produced gas originating from 
the Turkmen section of the pipeline until the end of 2010. 
Therefore, the Turkmen section can be completed in the beginning or 
middle of 2010 without throwing the project off schedule.  The same 
is true for the CNPC-produced gas that will come from the Altyn Asyr 
gas field at a later stage. 
 
¶7.  (SBU) COMMENT:  Given the challenges inherent in carrying out 
the Amu Darya project, CNPC's on-schedule progress is impressive. 
Despite wide-spread initial skepticism regarding the ambitious 
 
ASHGABAT 00001071  002 OF 002 
 
 
implementation dates, gas shipments are very likely to start in 
December 2009 or January 2010.  CNPC's ability to engage 
Turkmenistan on this project benefited from the Chinese Government's 
political backing together with the Chinese willingness to build the 
pipeline to China, thereby conforming to the Turkmen policy of 
selling its gas at its borders.  Other foreign companies interested 
in onshore gas production in Turkmenistan might improve their 
chances if they could similarly help the Turkmen not only produce 
more gas, but also facilitate its transport to markets.  END 
COMMENT. 
 
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