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Free Energy Ride Over in Turkmenistan

After 20 years, the government of Turkmenistan is moving to limit the volume of natural gas it doles out for free to its citizens as analysts rush to interpret the reasons behind the sudden policy change.

Turkmenistan holds the world’s fourth-largest natural gas reserves and has followed a generous energy subsidy policy since 1993, with unlimited free electricity, gas and water for its citizens, but an abrupt about-face will now see meters installed to measure domestic consumption and install a pricing regime for excess use.

The government announced it will install devices that will track how much gas the citizens are using. Country’s President Gurbanguli Berdimuhamedov said the government would set a price for anyone who exceeds the limit can pay easily without giving an exact gas quota.

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Neither government nor the country’s state-owned gas company gave a time frame or a reason behind the policy change. The government also didn’t immediately reveal how much it will charge for gas.

The generous subsidy regime was launched in 1993 under President Saparmurat Niyazov, otherwise known as the “Turkmenbashi”. The Turkmenbashi’s successor, Gurbanguli Berdimuhamedov, assumed the presidency in 2006 and extended the free energy policy until 2030.  

The new president, however, is having a change of heart and recent indications from the centers of power suggest that the country can no longer afford energy subsidies that cost a reported $5 billion annually.

"The installation of the meters will allow people to economically consume natural gas, while the maximum payment for using the gas will not create difficulties for the population, for each family," president Berdimuhamedov said during the televised address.

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He said during that the government hopes the meters would encourage people to consume energy in a more "economical" way.

But a new export policy may be in the works here.  

Turkmenistan has 153 gas fields (142 onshore and 11 offshore), 82 gas condensate fields, and 38 oil fields. Most of these proven reserves are in the South Caspian Basin and the western Garashyzlyk onshore area. But there is also unexplored potential in Turkmenistan’s area of the Caspian Sea, which the government believes contains over 80 billion barrels of oil. They need to boost exploration and production, which peaked at 213,000 bbl/d in 2004 and then declined slightly to about 202,000 bbl/d in 2010. Half of this production feeds the domestic market, but much more profit could be earned on more exports.

By. Joao Peixe of Oilprice.com


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