Iran has signed an agreement to help Turkmenistan develop its biggest gasfield in exchange for more gas imports. The deal, which could see Iran more than double its annual imports from the Central Asian country to 18 billion cubic metres from 8 billion cubic metres, is a strategic coup for Tehran, which has long sought to establish the Islamic Republic as a transit country for gas from the Caspian region. It also suggests that Turkmenistan, which has the potential to become a Central Asian gas superpower, is intent on establishing a diverse market for its exports. "Iran will co-operate to develop the Yoloten gasfield in Turkmenistan," said Reza Kasaizadeh, the chairman of National Iranian Gas Export Company, according to the website of Iran's state-run television. "Iran will act as a contractor and the Turkmen side will pay all the expenses for the project." Gholam Hossein Nozari, the Iranian oil minister, confirmed the deal and told the state's ISNA news agency that Iran would be getting 10 billion cubic metres of Turkmen gas under the agreement. The Yoloten field is part of the giant Yoloten-Osman deposit in south-eastern Turkmenistan, which an independent appraisal last autumn by the energy consulting firm Gaffney, Cline and Associates indicated could be the world's fourth or fifth-biggest gas reservoir. Containing a minimum of 4 trillion cubic metres of gas - 6 trillion cubic metres at best estimate, and potentially up to 14 trillion cubic metres, according to the recent assay - Yoloten-Osman is several times larger than Turkmenistan's biggest producing gasfield, Dowalatabad, which has about 1.5 trillion cubic metres of reserves. "Without a doubt, Turkmenistan is closing its gap with Russia and Iran, hitherto listed as having the world's largest and second-largest gas reserves at 48 trillion cubic metres and 26 trillion cubic metres respectively," M?K Bhadrakumar, a former career diplomat who served as India's ambassador to Uzbekistan, wrote in October. Yoloten-Osman was excluded from Turkmenistan's agreement last July to export more gas to Russia. Turkmenistan has contracts to supply Russia, historically its biggest gas customer, with about 50 billion cubic metres annually. Another 40 billion cubic metres per year of Turkmen gas exports are promised to China through a new pipeline. Europe has also been eyeing Turkmen gas, as the new estimate of Yoloten-Osman's potential confirms that Turkmenistan probably has sufficient reserves to supply all of the additional gas needed for the proposed Nabucco pipeline project to supply Caspian gas to European markets by a route skirting Russia. The ?8 billion (Dh38bn) project has assumed new strategic urgency for the EU following last month's disruption of Russian gas supplies to Europe through Ukraine. In December, the Austrian energy group, OMV, and the German utility, RWE, announced a joint venture to build a pipeline under the Caspian Sea from Turkmenistan to Azerbaijan, to link up through Georgia to Nabucco's starting point in eastern Turkey. The European enterprises are both members of the six-company Nabucco consortium. But Turkmenistan's government has shown little appetite for selling gas to Europe. It has also said it did not need the help of western energy companies to develop Yoloten-Osman or its other untapped gasfields. Seeking technical assistance from Iran, however, could be a risky proposition. The Yoloten gas is buried nearly 5,000 metres below ground and is sour, containing significant concentrations of deadly hydrogen sulphide. "Make no mistake, these will not be easy reserves to drill," said Jim Gillett, the head of business development for Gaffney Cline. Iran's ambitions to develop its own large gas reserves have been thwarted in recent years, in part by UN sanctions over its nuclear programme that have hampered its access to the most advanced technology for oil and gas production. However, the National Iranian Oil Company (NIOC) does have experience with developing sour gas. In 2007, it inaugurated the Amak project, which uses sour gas from several Iranian onshore fields. The company also extracts sour gas from some offshore Gulf fields. With the sanctions still in place, one of Iran's recent tactics has been to participate in gas development abroad, especially in the Caspian region. Last month, it submitted a US$1.7bn (Dh6.24bn) proposal to develop part of the second phase of Azerbaijan's Shah-Deniz offshore gas project. An Iranian oil ministry official said the country wanted at least a 10 per cent stake in the development. NIOC already holds 10 per cent of the first phase of Shah-Deniz, which is scheduled to come on stream by 2012. Last week, Vaclav Bartuska, the Czech Republic's ambassador at large for energy security, told a gas conference in Abu Dhabi that Europe would have to talk to Iran about securing more gas supplies. The Islamic Republic is seen as another potential gas supplier to Nabucco, either directly or as a transit supplier of Caspian gas. email@example.com
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