TURKMEN SECTION OF PIPELINE TO CHINA DELAYED

UNCLAS ASHGABAT 001387 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 BTIO TX SUBJECT: TURKMEN SECTION OF PIPELINE TO CHINA DELAYED REF: ASHGABAT 1071 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) A number of international media outlets recently reported that Turkmenistan had completed its section of the Turkmenistan - Uzbekistan - Kazakhstan - China gas pipeline, which is better known as the as Central Asia - China pipeline. In fact, these reports were premature, since there remains a lot of work to be done on the Turkmen section of the pipeline before it will be operational. ¶3. (SBU) The Turkmen section will be 188 kilometers long and will take gas produced by the state-owned gas company Turkmengaz to the Uzbek border. Stroytransgaz, a Russian company subcontracted by Turkmengaz, handles construction of the Turkmen section of the pipeline under a service contract. To date, Stroytransgaz still has to complete major operations such as conducting pipeline leak tests, laying pipeline into the trench, and constructing a pipeline crossing under the Amu Darya River. The river crossing is the most technically complicated portion of the Turkmen section and involves careful drilling of at least two 50-meter holes (known as deviation wells) to lay the pipeline beneath the riverbed. Stroytransgaz has completed the drilling of only one of these deviation wells so far. In addition, no information is available regarding the construction status of a compressor station, which is an integral part of the pipeline and is the responsibility of Belgian company Enex. ¶4. (SBU) Due to the amount of work left on the Turkmen section of the Central Asia - China Pipeline, it is unlikely that the Turkmen section will be ready by the end of December, the GOTX's target date for completion. Even if some portions of the construction remain incomplete by the target date, the Turkmen Government will most likely announce that the pipeline has been completed and will inaugurate it as planned. The GOTX will be able to proceed, despite the remaining construction, because the volume of gas to be supplied during 2010 will only be about 4-5 billion cubic meters. This amount will come from the CNPC-operated Bagtyarlyk contractual territory, located on the east bank of the Amu Darya River. As a result, construction of the Turkmen section can continue until the end of 2010 without disrupting initial supplies to China (reftel). ¶5. (SBU) COMMENT. The Turkmen Government is under tremendous pressure to ensure the completion of the Central Asia-China pipeline on time, especially since gas supplies to Russia have not resumed, and Turkmenistan desperately needs China as a gas customer. So far, the Chinese are ahead of schedule on their part of the pipeline, but the Turkmen have a lot of ground to make up in order to finish their section. Given the importance the GOTX placed on completing its section on time, it seems probable that the Turkmen will put the blame for any delays on Stroytransgaz and Enex. END COMMENT. CURRAN