Turkmenistan’s Deputy Prime Minister Baimurad Hodzhamuhammedov led an official delegation to Tokyo, Japan last week. As to be expected, the working visit focused largely on garnering increased Japanese investment in the Turkmen oil and gas industry. According to a government statement, the meetings focused on attracting Japanese investment, modernizing the oil and gas industry in Turkmenistan, and diversification of supply routes for Turkmen gas. The highlight, however, is movement by Turkmenistan to more deeply focus on converting natural gas into chemical products and gasoline.
Hodzhamuhammedov, according to Trend, met with Japanese Prime Minister Shinzo Abe and members of the Japanese business community. In 2013, when Turkmen President Gurbanguly Berdimuhamedov visited Tokyo he saw the signing of $10 billion in contracts relating to the energy sector. Many of the companies mentioned then–Turkmenistan’s Turkmengaz, Turkmenhimiya and Turkmenoil and Japan’s TOYO, Mitsubishi, and Kawasaki–make appearances in reports from Hodzhamuhammedov’s visit.
Trend reported that the Japanese expressed interest in investing in the countrys only port, Turkmenbashi. In 2013 Turkmenistan launched a $2 billion project to revitalize the port, aiming to build four new terminals and a shipbuilding yard. A Turkish firm, Gap Insaat, won the contract to manage construction. Turkmenistan envisions the port as the country’s “sea gates” and hopes that improved infrastructure can help transport Turkmen goods toward the European market. Turkmenbashi lies on the eastern edge of the Caspian sea, almost directly across from Baku, Azerbaijan.
There are already a bevy of endeavors centered on Turkmenbashi that have Japanese investors. A facility to produce polyethylene and polypropylene–two types of plastic that are made by first processing hydrocarbons like crude oil or natural gas–began construction last year in the village of Kiyanly, near Turkmenbashi on the shores of the Caspian Sea. According to Akipress, the project is worth $3 billion.
The polyethylene and polypropylene project will be implemented by Japan’s TOYO as well as South Korea’s LG and Hyundai Engineering. It is expected to produce 386,000 metric tons of polyethylene and 81,000 metric tons of polypropylene per year, though it is unclear when the plant will open. Additionally, Kawasaki and Turkey’s Ronesans Holding are investing in a plant to process natural gas into gasoline in neighboring Ahal province.
Polyethylene is most commonly used to make plastic bags and bottles, but depending on density has a multitude of other uses, for example ultra-high-molecular-weight polyethylene (UHMWPE) is used in hip replacement implants and, as a fiber, in bullet-proof vests. Polypropylene is used to make a whole variety of goods as well–from the lids on Tic-Tac boxes to chairs, from plastic molding to the stickers on a Rubik’s Cube.
Turkmenistan’s economy, it has been noted often here, is almost entirely dependent on the energy trade. And while gas sales to Russia have declined in the last decade, China has more than compensated, to the point that Turkmenistan is now virtually dependent on the Chinese market. China accounts for 80 percent of Turkmenistan’s exports. With the world’s fourth largest reserves of natural gas, it makes sense for the country to not only seek additional export partners for primary energy resources (see Casey Michel on TAPI and TII), but to also invest in using their resources in a different way, namely turning natural gas into other marketable goods (bonus if they don’t require pipelines to transport).