China's CNPC secures more Turkmen gas in new deal - source

ASHGABAT/SINGAPORE, Aug 24 (Reuters) - China's state energy firm CNPC will receive up to 51 billion cubic metres of gas from Turkmenistan in exchange for helping the country boost output at its giant Galkynysh field, according to a Turkmen industry source and local media report.

A launch ceremony for the project was held on Monday, according to the source, who said CNPC would set up three new wells at the field, each producing about 3 million cubic metres a day, over the next 30 months.

In exchange, it will receive 17 bcm of gas a year for three years, the source said.

Citing a senior government official, local media outlet Business Turkmenistan reported in June that CNPC had won an international tender issued by state-run Turkmengaz to build the three wells at the Galkynysh field under a service contract.

CNPC did not respond to a request for comment. Turkmengaz could not immediately be reached for comment.

A separate Chinese industry source familiar with the matter, who declined to be named, said the wells are likely to start pumping next year, but that the amount of gas CNPC expects to receive could be significantly below 17 bcm a year.

"The CNPC works are aimed at boosting gas output in Turkmenistan, where natural reserve declines and higher local consumption have led to supply reductions to China in recent years," said the Beijing-based source.

Turkmenistan is China's second largest gas supplier after Australia, which exports super-chilled liquefied natural gas (LNG) in tankers.

China is already the main market for Turkmen gas, although the former Soviet republic also sells limited volumes to Russia and is working on a pipeline that would ship its gas to Afghanistan, Pakistan and India.

China imported 20.7 million tonnes, or about 29 bcm of Turkmen gas in 2020, down 14% from 2019, according to Chinese customs data.

Reporting by Marat Gurt in Ashgabat and Chen Aizhu in Singapore; Additional reporting by Muyu Xu in Beijing; Writing by Olzhas Auyezov; Editing by Edmund Blair and Jan Harvey

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