UPDATE 1-Turkmen S.Iolotan gas field is world's No.2 -auditor

ASHGABAT, Oct 11 (Reuters) - Turkmenistan’s South Iolotan gas field is the world’s second-largest, estimated to hold up to 21.2 trillion cubic metres (tcm) of natural gas, British auditor Gaffney, Cline & Associates (GCA) said on Tuesday.

The deposit is key to the reclusive Central Asian state’s plans of becoming a major energy supplier to Europe and China.

GCA said the South Iolotan deposit contained between 13.1 tcm and 21.2 tcm of natural gas.

The upper range of the estimate tallies with the government’s view that the field could hold in excess of 21 trillion cubic metres and is a significant increase on GCA’s previous estimate, made in 2008, of reserves between 4 trillion and 14 trillion cubic metres.

GCA data presented by Business Development Manager Jim Gillett said the new estimate for South Iolotan’s natural gas reserves put it in second place among the world’s largest deposits of the fuel after Iran’s South Pars and ahead of Russia’s Urengoy.

GCA’s 2008 forecast had ranked South Iolotan as the world’s sixth-largest.

“Turkmenistan’s gas reserves are more than enough for any potential demand over the foreseeable future, whether it be from China, Russia, Iran or Europe,” Gillett said.

Turkmenistan, a former Soviet republic of 5.4 million people, holds the world’s fourth-largest natural gas reserves and is seeking to diversify exports from its Soviet-era master Russia to China, Iran and Europe.

The desert nation plans to more than treble annual gas output to 230 billion cubic metres (bcm) by 2030, of which it would export 180 bcm. South Iolotan, sprawling over 3,000 sq km about 350 km (220 miles) southeast of the capital Ashgabat, will supply a large portion of this increase.

Official data are hard to obtain in the secretive state, where the word of President Kurbanguly Berdymukhamedov is final, but industry sources estimate current annual gas output at 40-44 bcm per year, below the 75 bcm per year prior to 2009.

GCA said on Tuesday that current estimates South Iolotan’s reserves might rise further.

“The current estimated data for both South Iolotan and Yashlar may well increase still further as additional data are acquired,” Gillett said. Yashlar, a separate field, could contain between 1.45 tcm and 5.0 tcm, he said.

Four companies -- Chinese state oil and gas firm CNPC, Petrofac Emirates and South Korea’s LG International Corp and Hyundai Engineering Co -- won $9.7 billion worth of contracts in December 2009 to develop the field. They will drill and build gas plants.


Turkmen gas is crucial to the success of a European Union-backed project to deliver energy from the Caspian region through a Southern Corridor that would reduce Europe’s dependence on Russian supplies.

Gas from South Iolotan could theoretically be delivered to the Caspian shore via Turkmenistan’s planned “East-West” pipeline, from where it could cross the sea to Azerbaijan and link up with the planned Southern Corridor route to Europe.

The European Union agreed last month to negotiate a treaty to bring natural gas from Turkmenistan, drawing Moscow’s ire.

Shipments to Russia, which buys Turkmen gas for resale to Europe, have declined after a dispute between the two countries over a pipeline rupture in 2009.

Since the end of 2009, another pipeline snaking nearly 2,000 km (1,250 miles) through Central Asia has been carrying gas east to China’s northwestern region of Xinjiang.

China received more than 4 bcm of gas through the pipeline in 2010 and Turkmenistan has said supplies could rise to 17 bcm in 2011 and 20 bcm in 2012.

The two countries are also planning a pact to raise annual Turkmen gas supplies to 60 bcm per year -- equivalent to more than 60 percent of China’s domestic gas production in 2010 -- although no start date has been given.

Turkmenistan also supplies gas to its neighbour Iran. (Reporting by Marat Gurt; Writing by Robin Paxton and Dmitry Solovyov)