The Government has quietly signed a memorandum of understanding with Turkmenistan to help to secure British access to one of the world’s largest reserves of natural gas.

The agreement, signed in September during a trip to Ashgabat by Malcolm Wicks, the Energy Minister, is aimed at cementing ties between the two countries and improving access to Turkmen oil and gas by British companies such as BP and Burren Energy.

A spokesman for the Department for Business, Enterprise and Regulatory Reform confirmed the existence of the agreement, which was co-signed with Baymurat Hojamukhammedov, Turkmenistan’s Minister of Oil, Gas, Industry and Mineral Resources.

The spokesman described it as a “protocol of intentions” focused on promoting the role of British businesses in the region, improving access and “sharing expertise”. Mr Hojamukhammedov added that it aimed to “promote and open competitive energy supplies” in the region.

After Russia, the Central Asian country has the largest proven reserves of natural gas in the former Soviet Union – an estimated 101 trillion cubic feet, according to figures from BP. Gas production in Turkmenistan rose by 6 per cent last year.

The department’s spokesman said: “The Caspian region has a lot of potential. We hope that British companies will be able to assist in the energy development of Turkmenistan.”

Andrew Whittock, analyst at Oriel Securities, said: “Turkmenistan has enormous potential and they have to export because they have a small population.”

Burren Energy and Dragon Oil are the only British companies actively producing oil and gas in the country.

Burren has invested about $500 million (£240 million) in the country and is producing over 16,000 barrels of oil equivalent per day at fields in the Nebit Dag region on the shores of the Caspian Sea. Dragon Oil operates oil-fields located in the Cheleken Contract Area offshore Turkmenistan, in the Caspian Sea.

However, several larger Western companies, including BP, Chevron and BG, have demonstrated interest in the region, which is keen to exploit its huge potential as an exporter.

The Caspian region has about 4 per cent of global oil supplies and 5 per cent of global gas reserves.

Mr Wicks also met Kurbanguly Berdymukhamedov, the newly elected President, during his trip. Mr Berdymukhamedov, who was visiting Brussels yesterday for related talks with the EU on opening up the country’s energy reserves, is a controversial figure.

Since taking control following the death last year of Saparmurat Niyazov, the eccentric dictator, he has been keen to end the country’s dependence on Russia and has vowed to open up to foreign investment.

However, his government has also been strongly criticised for its poor record on human rights and corruption. Tom Mayne, a campaigner for Global Witness, the anticorruption watchdog, said: “Western companies that plan to invest in Turkmen gas should pledge to publish any payments they make to the Turkmen Government so that all the money can be properly accounted for.”

The Government spokesman said that Mr Wicks had raised human rights concerns with the Turkmen administration during his visit.

State of the nation

101,000bn

Proven gas reserves in cubic feet (13th largest reserves in the world)

42bn

Gas exports in cubic feet

$8,900

GDP per capita

5.1m

Population

60%

Unemployment rate

Source: CIA World Factbook, Times archives

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