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U.S. Companies Eye Turkmen Energy Projects - Envoy

U.S. energy majors, overlooked in a near-$10 billion contract bonanza to develop Turkmenistan's largest natural gas deposit, are making inroads to participating in other projects in the Central Asian state, an official said.

Richard Morningstar, Washington's energy envoy for the Eurasian region, said on Tuesday that U.S. companies had made progress on offshore projects in Turkmenistan and that he hoped Ashgabat would supply gas to a major pipeline route to Europe.

"American companies would like very much to participate in Turkmenistan with respect to all sorts of projects, both onshore and offshore," Morningstar told reporters after meeting Turkmen President Kurbanguly Berdymukhamedov and other senior officials. Turkmenistan is offering natural gas to be drawn from the world's fourth-largest reserves to consumers in China, Iran and the West as it seeks to diversify supplies from its traditional market, Russia. "American companies understand that, if they are going to participate onshore, it has to be consistent with Turkmen law," Morningstar said.

"We are hopeful that the government of Turkmenistan and the companies will come up with creative ways in which companies can participate. In the meantime, a lot of progress is being made with offshore projects. We expect that to continue."

He declined to name the companies or projects involved.

Chevron Corp had held talks about its possible participation in developing the South Iolotan gas field, the largest in Turkmenistan, a company official said in November.

But when $9.7 billion worth of contracts were awarded in December to drill and build plants at the deposit, which ranks among the world's fifth-largest, firms from China, South Korea and the United Arab Emirates shared the spoils.

Cleaner Energy

Chinese President Hu Jintao opened a pipeline in December that will bring gas from another Chinese-developed field in the Turkmen desert to help fuel economic growth at home.

Ashgabat has also agreed to increase gas supplies to China beyond the pipeline's 40 billion cubic metres of annual capacity, a level it expects to reach by 2012. Morningstar said the United States viewed China's role in the Turkmen energy market as positive.

"Gas is a much cleaner form of energy than coal, for example. The more gas that China consumes, the better for the environment," he said. "Gas (from Central Asia) that goes to China helps to open up supplies of gas from other sources that otherwise might go to China. At the same time, it's important that host countries work with China to make sure that companies are using best practice."

The U.S. envoy also welcomed the deal signed by Turkey and Azerbaijan on June 7 that opens the way for Azeri gas exports to Europe and put the European Union-backed Nabucco pipeline a step closer to securing supplies.

But he did not say which pipeline project the United States favoured to transport gas to western Europe via the so-called "southern corridor". Russian natural gas export monopoly Gazprom favours a rival project, South Stream.

"It's up to the commercial interests to determine which specific project makes the most sense," Morningstar said.

He said he hoped that Turkmenistan would supply gas to any route via the "southern corridor" to European markets, and that Kazakhstan - Central Asia's largest oil producer - would also become a significant gas supplier as its oil production rises.

"I hope that, over the years, as more gas becomes available from Kazakhstan as its oil production increases, some of the gas may go West as well as Turkmen gas."

Source: Reuters

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