Turkmenistan's economy: gas piped east and a state that owns the land

How much rests on natural gas

Turkmenistan's gas reserves are estimated at 50 trillion cubic metres in the Economy of Turkmenistan article, and the Galkynysh field alone was estimated in May 2011 to hold 21.2 trillion. The World Bank describes the economy as largely under state control, with foreign exchange and government revenue from oil and gas exports ensuring a basic standard of living for much of the population. In 2024 taxes from the oil and gas sector made up 40.4% of budget revenue, against 10.8% from the non-state sector.

The industry is older than the republic. Before 1958 the only gas produced was associated gas from oil wells in the west; that year the first gas wells were drilled at Serhetabat and Derweze, and fields across the central Karakum were found between 1959 and 1965. Associated gas output was 1.157 billion cubic metres in 1965. Production reached 13 billion cubic metres in 1970 and 90 billion in 1989. Most of the export revenue then went into the Soviet central budget.

Independence gave Turkmenistan control of the revenue and left it with the pipelines. In the 1990s customers in the Commonwealth of Independent States paid late or in barter, and in the mid-1990s Turkmenistan stopped delivering to some of them. State media reported production of 80.6187 billion cubic metres in 2023.

Which pipelines carry Turkmen gas to its buyers

The Soviet network ran north. Two lines from Ojak to Russia, of 3,087 and 2,259 kilometres, and the Gumdag and Shatlyk lines carried gas to Russia, Ukraine and the Caucasus. The first pipeline built to a foreign customer after independence was the 140-kilometre Korpeje to Kurtkui line to Iran, opened in 1997. The Central Asia to China pipeline opened on 14 December 2009 and changed the direction of the trade. Its three lines, A, B and C, cross Uzbekistan and Kazakhstan and have a combined design capacity of 55 billion cubic metres a year, of which Turkmenistan's quota was 35 billion; in 2023 the foreign ministry put the quota at 40 billion. Press reports put exports to China at 34.09 billion cubic metres in 2022, and Chinese sources reported that Turkmenistan earned $6.79 billion from those deliveries in 2021.

The other customers came and went. Russia cut its purchases step by step and stopped them on 1 January 2016; Gazprom resumed buying in 2019, taking 4 billion cubic metres that year and about 10 billion in 2021. Sales to Iran, estimated at 12 billion cubic metres a year, ended on 1 January 2017 when Turkmengaz cut supply over arrears that Ashgabat put at $1.8 billion, and resumed in summer 2023 under a deal for up to 20 million cubic metres a day. In November 2021 Turkmenistan, Iran and Azerbaijan agreed a swap of up to 2 billion cubic metres a year, and in March 2025 a further swap through Iran began delivering gas to Turkey.

Two westward and southward routes remain plans. The East to West pipeline, completed in December 2015, can bring up to 30 billion cubic metres a year to the Caspian shore for a Trans-Caspian pipeline to Azerbaijan that has not been built. The Turkmenistan to Afghanistan to Pakistan to India pipeline, TAPI, has an estimated cost of $25 billion; Turkmenistan finished its own section in 2019.

What else the state builds from oil and gas

Oil came first in the west. Commercial drilling began in the 1890s, Branobel exploited the Cheleken fields from 1909, and output passed two million tonnes a year by 1940 and fourteen million by 1970. It was reported at 9.8 million tonnes in 2019 and at 8.3167 million tonnes in 2023 by state media. Crude is refined at Türkmenbaşy, with a capacity of more than 10 million tonnes a year as of May 2016, and at Seydi, which processed only about half a million tonnes in 2020 against a design capacity of 6 million. In January 2021 Turkmenistan and Azerbaijan agreed to develop together a Caspian field on their border, renamed Dostluk, "friendship", with possible reserves of up to 60 million tonnes.

From 2014 the state built a series of plants to turn gas into other products, with Turkish, Japanese, Korean and Belarusian contractors. A $1.7 billion gas-to-gasoline plant at Ovadandepe was commissioned on 28 June 2019 with a design capacity of 600,000 tonnes of gasoline a year. The $3.4 billion polymer plant at Kiyanly opened on 17 October 2018, produced 67,900 tonnes of polyethylene in the first ten months of 2019 against a design capacity of 381,000 tonnes a year, and had stopped working by January 2023. The $1.3 billion urea plant at Garabogaz opened on 18 September 2018, and the $1.1 billion Garlyk potash plant, inaugurated in March 2017, reportedly runs at 2 to 7% of its rated capacity.

Electricity is sold abroad too. Generation was reported at 22.52 terawatt-hours in 2019, and new gas-fired plants such as Mary-3, commissioned in 2018 with 1.574 gigawatts, and Zerger, commissioned in September 2021, were built mainly to export power; Mary-3 was intended for Afghanistan and Pakistan.

The gas industry also leaks. In February 2022 the European Space Agency's satellite instrument identified Turkmenistan as an ultra-emitter of methane, with the lost gas worth about $6 billion a year. By 2026 the government had responded with repair plans to about 20% of reported leaks and completed eight repairs.

How the land is farmed

Virtually all field crops are irrigated, and two crops take most of the land. In 2019 wheat was sown on 761,000 hectares and cotton on 551,000. Grain and cotton remain under state control in every phase of production, while private farmers grow most of the fruit and vegetables, chiefly tomatoes, watermelons, grapes and onions. After independence the Soviet collective and state farms were turned into farmers' associations, the daýhan birleşigi. The World Bank counts 42.5% of the labour force in agriculture and describes low productivity, water scarcity and deteriorating soil.

Cotton has been grown in the Murghab valley since the Russian conquest of Merv in 1884, and until 1991 it went to Russia raw. About 1.5 million tonnes of raw cotton were reportedly harvested in 2020. The government banned exports of raw cotton in October 2018 and turned to yarn and textiles, after investing roughly $2 billion in 70 plants since independence; cotton textile exports were worth $123.6 million in 2019.

How the harvest is gathered is contested. Officially, minors are banned from working in it. Freedom House reported in 2025 that cases of schoolchildren and public employees being forced to pick cotton continued, and human rights organisations quoted in the Turkmenistan article say teachers and doctors are made to pick under threat of losing their jobs.

Food is the other strain. Since 2018 independent media have reported queues of hundreds of people for bread and flour, and Human Rights Watch reported that the supply of subsidised staples kept shrinking in 2024 while prices rose. In 2006, after grain harvests failed, rationing returned in most regions.

Who owns the economy

All land is property of the state. The banking system is under full state control and in 2005 an estimated 95% of loans went to state enterprises. Official statistics count 2,628 former state properties privatised between 1994 and the end of 2020. By official count the state sector employed 25.3% of workers in 2019 and the private sector 50.3%, and the average monthly wage in 2019 was 1,685.10 manats.

The state also builds. In January 2021 the government acknowledged more than 2,500 large construction projects under way at a cost of $37 billion, and a new city, Arkadag, the capital of Ahal Province, was budgeted at $4.8 billion. The government's own account of the economy describes a diversified industrial base and programmes for each period, among them a Program of Socio-Economic Development for 2019 to 2025 that put investment in fixed assets at 229.3 billion manats.

For citizens, the largest change was in utilities. From independence until 2019 each citizen received free monthly allowances of electricity, natural gas and water, set by a decree of 14 August 2003 at 35 kilowatt-hours of electricity and 50 cubic metres of gas a month and 250 litres of water a day. The allowances were capped after 2007 and abolished on 1 January 2019.

How goods leave a landlocked country

The World Bank calls connectivity the key to diversifying the economy and says trade logistics need significant improvement. The main outlet to the west is the Caspian port of Türkmenbaşy, expanded by the Turkish contractor Gap İnşaat and completed in May 2018. The Turkmenistan article gives the cost as $1.5 billion and the Economy of Turkmenistan article as $2 billion for the works of 2013 to 2018; both put annual capacity at about 25 million tonnes of dry cargo, with room for 300,000 passengers, 75,000 vehicles and 400,000 containers. A ferry runs to Baku, and oil goes by tanker to Baku and Makhachkala.

By land, the state railway runs 3,181 kilometres on the Russian gauge and moved 23.8 million tonnes of freight in 2019, with no scheduled international passenger service. Turkmen Railways is building a line into Afghanistan from Serhetabat to Herat. Road transport carried 85.5% of cargo by weight in 2019, and a toll motorway from Ashgabat to Türkmenabat, budgeted at $2.3 billion, is being built by four Turkmen firms.

What comes back is mostly equipment. In 2019 the largest categories of imports were machinery, at $1.5 billion, base metals at $968.3 million, chemicals at $682.3 million and vehicles at $453.5 million.

Why the official figures are disputed

Turkmenistan publishes growth figures that outside institutions do not endorse. The World Bank reports official GDP growth of 6.3% in both 2023 and 2024 and official inflation of 3.8% in December 2024, and its June 2021 Global Economic Prospects report excluded the country for lack of reliable data. In 2006 the Asian Development Bank noted that actual growth was likely much lower than the official estimate, and the UK government's Overseas Business Risk report for 2021 said no reliable economic data are published in Turkmenistan.

The exchange rate is the plainest case. The manat has been fixed against the dollar since 2009, at 2.85 manats, and since 1 January 2015 at 3.50. On the black market it was reported at 29 to 30 manats in February 2021, about 40 manats by mid-April that year and 18.5 manats in November 2022. The Central Bank issues the currency but does not publish data on the money supply, and budget figures leave out large extra-budgetary funds. The forecasts carry the same caveat. In its Asian Development Outlook of September 2026, the Asian Development Bank projected growth of 6.3% for 2026 and 6.2% for 2027 and inflation of 6.0% in both years. The World Bank expects inflation to rise over the medium term as banks keep lending to state enterprises and public wages and pensions rise by 10% a year, and names an overvalued currency among the brakes on growth outside hydrocarbons. The politics article describes the state that makes these decisions.