Investment attractiveness of Turkmenistan: multibillion joint projects

The development of mutually beneficial cooperation in the trade, economic and investment spheres is intended to facilitate the realization of Turkmenistan's economic capacity. The share of foreign investments put into in the Turkmen economy is growing steadily; the number of investment projects and joint ventures is increasing.

Among the leading business partners of Turkmenistan is the Chinese National Oil and Gas Corporation "CNPC", which since 2007 has been exploring, arranging and developing deposits of the contract area "Bagtyyarlyk", which serves as the raw material base of the transnational gas pipeline Turkmenistan-China. This power line was put into operation in December 2009. According to interstate agreements, 65 billion cubic meters of Turkmen natural gas will be delivered to China through this gas pipeline in the near future.

The oilfield construction of "Galkynysh", which is one of the largest in the world in resource reserves estimated at 26.2 trillion cubic meters of gas is among other major investment projects implemented jointly with CNPC and Petroçaýna. The capacity of the complex of plants for the preparation of commercial gas is 30 billion cubic meters of natural gas per year. In accordance with the contract concluded with the State Concern "Turkmengaz", CNPC is building the second complex of commercial gas production facilities at the field in the amount of 30 billion cubic meters per year.

Partnership with other leading states of the Asia-Pacific region is developing. In October 2015, a large package of agreements was signed, envisaging the implementation of joint projects worth over 18 billion US dollars within the framework of the official visit of Japanese Prime Minister Shinzō Abe with representatives of Japanese business and financial circles to Ashgabat. Among them are projects of construction of a gas processing complex for production of linear polyethylene of low pressure from ethylene; a plant for the production of liquid fuel from natural gas based on Japanese technology GTL; a plant for processing of gas into polymers; facilities in the development of the gas field "Galkynysh."

In addition, the contract was signed between State Concern "Turkmengaz" and the Consortium of "LG International Corp"., "Hyundai Engineering Co,Ltd" (Republic of Korea) and "Itochu Corporation" (Japan) for the construction of a plant for the production of synthetic liquid fuel in Akhal velayat by processing natural gas, as well as the Framework Agreement for the construction of a "turn-key" plant for the production of polyethylene and polypropylene with installation of ethane cracking in Dashoguz velayat.

A number of projects related to gas processing are planned to be implemented in the chemical industry and energy, including the construction of a complex for the production of concentrated phosphate fertilizers at the Turkmenabat chemical plant and 432 MWt (ISO) gas turbine power station in Serdarabat etrap of Lebap velayat.

Along with this, Agreement on cooperation between the State Bank for Foreign Economic Affairs of Turkmenistan and the bank "Sumitomo Mitsui Banking Corporation" (SMBC) was signed. Bankers considered it expedient to attract financial and credit resources of the business circles of the Land of the rising sun to the Turkmen market, including in the form of long-term soft loans for the implementation of investment projects.

Turkmenistan intends to occupy the worthy place in the profitable market of gas-chemical products. This task is directly connected with the construction of a plant for the production of gasoline from natural gas in Akhal velayat. The complex is being built by joint efforts of the State Concern "Turkmengaz" and the consortium of companies "Kawasaki Heavy Industries Ltd." (Japan) and "Rönesans Endüstri Tesisleri Inşaat Sanaıi ve Ticaret A.Ş." (Turkey).

The plant will be able to annually process 1 billion 785 million cubic meters of "blue fuel" and produce 600,000 tons of gasoline A-92, which meets the highest environmental requirements in accordance with the Euro-5 standard. It is also planned to produce 12,000 tons of diesel fuel and 115,000 tons of liquefied gas a year. The total cost of this investment project is almost 1 billion 700 million US dollars.

In the village of Kiyanly on the Caspian coast, a gas chemical complex is being built ahead of schedule, where 5 billion cubic meters of natural gas will be processed and 386,000 tons of polyethylene and 81,000 tons of polypropylene will be produced. The project is carried out jointly with the consortium of companies "TOYO Engineering" (Japan), "LG International Corporation" and "Hyundai Engineering Corp. Ltd." (Republic of Korea). Its total cost is more than 3.4 billion US dollars.

Granulated polypropylene is highly rated on world markets and is used in the manufacture of polymer film, artificial fiber, high-strength sheet thermoplastics and polymer products. There are excellent export prospects of other products of the complex - polyethylene. On its basis, it is also possible to arrange the production of various pipes and goods of mass demand.

The plant for the production of polypropylene film with capacity of more than 20,000 tons of products per year is being completed at the Turkmenbashi complex of oil refineries.

Under the terms of Production Sharing Agreements, a number of well-known international companies operate in the country. "Dragon Oil" (United Arab Emirates), which develops fields that are part of contract area "Cheleken» has been working for many years in the Turkmen sector of the Caspian Sea, which total reserves are estimated by experts at 18.2 billion tons of equivalent fuel. "Petronas Carigali (Turkmenistan) Sdn.Bhd." Company (Malaysia) is developing the Caspian fields that are part of the contract area "Block-1".

A solid experience of cooperation in the oil and gas sector has also been accumulated with the companies "ENI S.P.A." (Italy), "Mitro International Limited" (Austria), "RWE" (Gemania), etc.

The Concept of creating free economic zones in Turkmenistan for the period until 2023 is being developed. Free economic zones (FEZ) are the integral part of economic relations at the international level noted President Gurbanguly Berdymuhamedov at the meeting of the Cabinet of Ministers on March 18. Successful implementation of the Concept will allow widely introducing advanced technologies, boosting the economy by attracting foreign capital and will also facilitate the flow of foreign currency assets, stressed the Leader of the nation.

The country retains high rates of growth of the gross domestic product and other macroeconomic indicators. Many international experts believe that Turkmenistan has the efficient economic system with a strong investment capacity. The IMF, the World Bank and other authoritative international organizations and financial structures invariably note positive tendencies of the Turkmen economy.

The state provides substantial support to foreign business in the form of tax, customs, visa, insurance benefits.

The adoption of the Laws of Turkmenistan "On Foreign Investments", "On Hydrocarbon Resources" and other normative acts regulating the legal framework for investors in Turkmenistan played an important role in this.

The interests of leading foreign investors are associated with the presence of huge natural resources, the country's export and transit capabilities, its intensive industrialization and the developing market of trade and services.

In addition to heavy industry, there are wide opportunities for foreign capital in the textile industry, agriculture, electronic industry, in the production of building materials based on local raw materials, tourism business, etc. Foreign business circles also show the growing interest to projects in the field of transport and communications, modernization of the civil aviation infrastructure, rail and sea transport, construction of high-speed highways, and the use of the national space satellite. Consistent course of privatization of property and denationalization, the all-round support of private entrepreneurship, the creation of joint ventures with foreign firms also plays an important role in attracting foreign investments.

The international financial institutions, including the European Bank for Reconstruction and Development, are actively involved in lending and financing a number of investment programs and projects in Turkmenistan.

Another example is the fact that in October of last year the Agreement of Government of Turkmenistan with the Islamic Bank of Development was signed for the allocation of a loan in the amount of 700 million US dollars for the construction of the section of Turkmenistan-Afghanistan-Pakistan-India gas pipeline passing through our country.

In general, all this visually illustrates great interest and readiness for investment and technological cooperation with Turkmenistan from large the foreign business that speaks about trust to our country as to the reliable partner with good reputation, high international authority and the big prospects of economic growth.