The Turkmenistan oil and gas upstream market is expected to grow at a CAGR of more than 1% during the forecast period. Sustained growth in the demand for natural gas, petroleum, petrochemical products, and developments of oil and gas exploration and production activities are the major drivers for the oil and gas upstream sector in Turkmenistan. However, oil production has decreased slightly over the past few years due to technological constraints and government regulations. This, in turn, likely to restrain market growth during the forecast period.

  • Most of the economically viable oil and gas fields in the country are situated inland. Therefore, it is evident that the onshore segment is expected to be dominated in the market.
  • The oil and gas industry is a key contributor to the economic success of Turkmenistan. Together with the development of a stable legal foundation, in line with international standards, Turkmenistan has established the necessary conditions for attracting investment to oil and gas sector. In addition, advancement of the oil and gas industry is one of the main policy priorities for the country, which in turn, likely to provide opportunities in the market in the future.



Key Market Trends

Onshore Segment to Dominate the Market

  • Turkmenistan had proven oil reserves of 0.6 thousand million barrels in 2018. Most of the country’s oilfields are situated in the South Caspian Basin and the Garashyzlyk onshore area in the west of the country. Most of the countries proved oil reserves are held in onshore.
  • Turkmenistan ranks in the top countries for natural gas reserves in the world and also in terms of gas production. Turkmenistan has proven natural gas reserves of 688.1 Trillion cubic feet (Tcf) at the end of 2018. Turkmenistan has several of the world’s largest gas fields, including the Amu Darya basin in the southeast, the Murgab Basin, and the South Caspian basin in the west.
  • The Dauletabad Gas Field, located in the Amu Darya basin in the southeast, is one of Turkmenistan’s largest and oldest gas-producing fields. Major discoveries at the Galkynysh gas field, formerly known as the South Yoloten in the prolific eastern part of the country are expected to offset most declines in other large and mature gas fields and are likely to add to the existing proven reserve amounts. The Galkynysh Gas Fields is expected to hold gas reserves of more than 27 trillion cubic meters.
  • In 2018, crude oil and condensate production has declined to 196 thousand barrels per day owing to the decline in oil exports from Turkmenistan, attributed it to price disagreements. As most of the country’s proven reserve are in onshore and with several upstream projects undergoing development in Turkmenistan, the onshore oil and gas fields are expected to dominate the market.



Increasing Demand for Natural Gas to Drive the Market

  • Turkmenistan’s economy depends heavily on exports of natural gas. Turkmenistan has some of the world’s largest natural gas reserves, but most of them remain undeveloped. The upgradation of domestic and export infrastructure is likely to make the country a major gas supplier. In 2018, natural gas consumption has reached 28.4 billion cubic meters representing an increase in the consumption rate of about 12.2% over the previous year owing to the increase in demand.
  • Turkmenistan’s most important gas fields include the Galkynysh gas field, Yashlar-Minara, and Bagtyarlik. The government in capital Ashgabad opted to develop these giant fields through concessions and service contracts with Petrofac, LG International, CNPC, and Hyundai Engineering and Construction Co. for a specific timeframe instead of the popular Production Sharing Agreement model (PSA).
  • The Turkmenistan–Afghanistan–Pakistan–India Pipeline (TAPI), also known as Trans-Afghanistan Pipeline, is a natural gas pipeline project being developed by the Galkynysh – TAPI Pipeline Company Limited. The pipeline is expected to transport natural gas from the Galkynysh Gas Field in Turkmenistan through Afghanistan into Pakistan and then to India. Construction on the project started in Turkmenistan in 2015.
  • The country’s aim is to form routes for exporting energy resources through diversification and the creation of multi-vector pipeline systems. Turkmenistan is expected to implement large-scale projects to build major energy bridges to both the east and west. The aim of the Ashgabat authorities is to increase gas production rates, thus boosting exports of gas.
  • Therefore, the upcoming projects in the oil and gas industry is expected to contribute to an integrated industrialization of Turkmenistan and the dynamic development of the national economy.



Competitive Landscape

The Turkmenistan oil and gas upstream market is moderately consolidated. Some of the key players in this market include Buried Hill Energy, China National Petroleum Corp, Dragon Oil PLC, Hyundai Engineering & Construction Co., and Eni SpA.

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