The Mineral Industry of Turkmenistan in 2015

2015 Minerals Yearbook TURKMENISTAN [ADVANCE RELEASE] U.S. Department of the Interior September 2019 U.S. Geological Survey The Mineral Industry of Turkmenistan By Karine M. Renaud Turkmenistan has more than 200 identified deposits of pay fees for the use of subsoil resources, and follow the minerals, including barite; celestine; coal; copper; clays, such environmental requirements to prevent contamination of the as bentonite and kaolin; gypsum; lead; marble; potash; quartz subsoil (Food and Agriculture Organization of the United sand; salt; sand and gravel; sulfur; and zinc. The country’s most Nations, 2014, p. 6–7, 18, 25, 27–28; AzerNews, 2015c). important mineral deposits, from an economic perspective, According to the amended Law on Subsoil 2014, the use are its natural gas and crude petroleum deposits and bromine- and protection of mineral resources is overseen by the Cabinet iodine brine. In 2015, Turkmenistan was ranked fourth in the of Ministers of Turkmenistan, Federal agencies, and local world in iodine production and eighth in the world in bromine authorities. The Cabinet of Ministers also includes the State production. Turkmenistan had the world’s fourth-ranked proven Commission on Mineral Resources. The licenses for exploration natural gas reserves, after Iran, Qatar, and Russia, which were are issued for 6 years with the possibility of being extended for estimated to be 17.5 trillion cubic meters (BP p.l.c., 2016, p. 20). 2 years; the mining licenses are issued for 20 years with the The country’s proven crude petroleum reserves were estimated right to be extended for 5 years; and the licenses for exploration to be 600 million barrels (Mbbl) (BP p.l.c., 2016, p. 6). In and mining (combined) are issued for 25 years (Food and 2015, the nonfuel minerals or mineral products produced in Agriculture Organization of the United Nations, 2014, p. 16–17; Turkmenistan included ammonia, bentonite, cement, gypsum, AzerNews, 2015b, c). lime, salt, and urea (table 1; Ministry of Nature Protection of In 2015, the Government continued development of the Turkmenistan, 2012, p. 11; Infoabad.com, 2013; Schnebele, nonhydrocarbon sector, most notably by adopting the National 2017a, b). Program for Socio-Economic Development for 2011–2030. The program includes modernization of the country’s infrastructure Minerals in the National Economy and promotion of FDI, which are intended to help diversify the economy of Turkmenistan and reduce the country’s reliance Turkmenistan’s real gross domestic product (GDP) decreased on hydrocarbon resources. The priority sectors include electric by 6.5% in 2015 following a decrease of 10.3% in 2014 owing power, chemicals, construction, oil and gas, and other industries to the decline in energy prices. Slow growth in the hydrocarbon (European Commission, 2015b, p. 11; Asian Development sector reduced industry expansion to 3.1% in 2015 from 11.4% Bank, 2016, p. 114, 116). in 2014 (Asian Development Bank, 2016, p. 106). In 2015, the Government continued to work on increasing In 2015, the total foreign direct investment (FDI) inflow trade with neighboring countries, to develop natural resources, in Turkmenistan increased by 2% to $4.3 billion from and to construct necessary infrastructure. In 2015, the $4.2 billion in 2014. In 2015, most of the FDI in Turkmenistan Governments of Afghanistan and Turkmenistan planned to continued to be invested in the construction of cement, cooperate in the energy and transport sectors by constructing potash, and steel plants, and in the crude petroleum and a second terminal that would allow the shipment of petroleum natural gas sectors (United Nations Conference on Trade and products. Currently, Turkmenistan sells petroleum products to Development, 2016, p. 199). Afghanistan through existing terminals on the Turkmenistan- Government Policies and Programs Afghanistan border (AzerNews, 2015a; Central and South Asia Business, 2015). In 2015, the Government adopted an amended Law on In March 2013, the Presidents of Afghanistan, Tajikistan, Subsoil 2014 (formerly the Law on Subsoil 1992). According and Turkmenistan signed a memorandum of understanding to the new Law on Subsoil 2014, the subsoil and its resources for the construction of a 400-kilometer (km)-long railway that throughout Turkmenistan, including the Caspian Sea sector, would connect all three countries. The new railway would are the property of the Government and cannot be purchased start in the eastern part of Turkmenistan in the Atamyrat or sold. All activities related to crude petroleum are controlled District; run to Akina-Andkhoy, Afghanistan; continue to Shir by the Hydrocarbon Resources Law. If a signed international Kahn, Afghanistan; and connect with the town of Pyandzh in agreement includes rules that differ from the rules set forth in the Tajikistan. The project was part of the Central Asia Regional Hydrocarbon Resources Law, then the rules of the international Cooperation Program, which was financed by the Asian agreement are to be applied. The objectives of the amended Development Bank. The cost of the project was estimated to Law on Subsoil 2014 include the following: (1) protection of be between $1.5 billion and $2 billion. The construction of the interests of Turkmenistan and its citizens, the rights of the railway began on June 5, 2013, and although the railway subsoil users, and mineral resources; (2) establishment of legal had been expected to be completed in all three countries by guarantees; and (3) creation of favorable conditions for the 2015, aspects of the railway construction were still under economic growth of the country and for investors. The law also discussion as of yearend (Economist, The, 2013; Salimov, 2013; states that the companies that use subsoil areas should conduct Sadykov, 2014). complete geologic exploration, use mineral resources efficiently, TURKMENISTAN—2015 [ADVANCE RELEASE] 47.1 Production Dragon Oil plc. of the United Arab Emirates; Block III, which was operated by Buried Hill Serdar Ltd. of Cyprus; Blocks 11 Detailed production data and other information regarding and 12, which were operated by the joint venture of Maersk mineral production for most mineral commodities in Oil of Denmark and Wintershall Holding GmbH of Germany; Turkmenistan, except natural gas and petroleum, have not Block 23, which was operated by Rheinisch-Westfälisches been available for a number of years. The State Committee on Elektrizitätswerk AG (RWE) of Germany; and Block 21, which Statistics of Turkmenistan reported that production increased was operated by ITERA Oil and Gas Company LLC of Russia for most of the economic categories that it tracks, including (ITERA). Under the Petroleum Law of 2008, which regulated those for construction materials, metals, mineral fertilizers, the PSAs, the corporate entities were subject to a 20% income and mineral products. Production data in table 1 are based on tax and a 15% royalty; in addition, 70% of the workers of past levels of production and on occasional published data the foreign-owned companies were required to be Turkmen reported in the media. In 2015, sulfur production increased by citizens and 20% of the social welfare tax of the local staff was an estimated 19%; cement, by 14%; salt, by an estimated 9%; to be paid by foreign investors and their subcontractors (U.S. bentonite, by an estimated 8%; ammonia [nitrogen (N) content] Department of State, 2014, p. 18; 2015, p. 13, 22). and crude petroleum, by an estimated 5% each; and natural gas and rolled steel, by 4% each (table 1; Global Cement, 2015; Mineral Trade BP p.l.c., 2016, p. 8, 16, 22; State Committee on Statistics of Turkmenistan, The, 2016, p. 2–3). Turkmenistan’s exports and imports decreased owing to low global oil and gas prices and low demand for energy Structure of the Mineral Industry products, especially natural gas. Total exports were valued at $12.8 billion, of which hydrocarbon exports accounted for Turkmenistan’s mineral industry was dominated by $11.6 billion (91% of the total export value), and total imports state-owned enterprises, and the natural gas and oil industry, were valued at $11.8 billion. Export commodities included by partnership enterprises. State-owned SI Turkmenhimiya crude petroleum, natural gas, and petrochemicals. In 2014, Holding operated 10 facilities in Turkmenistan—PO Maryazot, Turkmenistan’s main export partners were China (which the Turkmenkarbamid plant, IA Turkmenmineral, the Khazar received 70% of Turkmenistan’s exports), the countries of chemical plants, PO Garabogassulfat, the Balkanabad iodine the European Union (8%), Turkey (5%), Afghanistan and the plant, the Bereketskiy iodine plant, the Guvlyduz Salt United Arab Emirates (3% each), Iran (2%), and other countries Factory, the Dokunkhimiya company, and the Institute of (3%). Import commodities included chemicals. In 2014, the Chemistry. SI Turkmenhimiya Holding was responsible for main import partners were Turkey (which supplied 24% of the implementation of new technology in chemical facilities, Turkmenistan’s imports), the countries of the European Union the distribution of fertilizers and chemical products to the (17%), Russia (13%), China (10%), the United Arab Emirates agricultural industries and the citizens of Turkmenistan, and (7%), the United States and Ukraine (5% each), Kazakhstan the export of fertilizers and chemical products (Neft and Gas (4%), Iran (3%), and Uzbekistan (2%) (European Commission, Turkmenistana, 2006a; TurkmenPortal, 2015; U.S. Department 2015a, p. 8; Asian

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