* British auditor prepares new reserve estimate
* South Iolotan field second only to Iran's South Pars
* Potential gas supplier to China, Europe
TURKMENBASHI, Turkmenistan, May 25 The British auditor of Turkmenistan's South Iolotan gas field said on Wednesday that its forthcoming report on the deposit would reveal it to be comfortably the world's second-largest. Gaffney, Cline & Associates (GCA) expects to present a revised audit to Turkmen President Kurbanguly Berdymukhamedov in mid-June that will show South Iolotan to be second only in size to the South Pars field in neighbouring Iran.
"It appears that the South Iolotan field is now easily the world's second-largest gas field in terms of gas-in-place," Peter Holding, GCA general manager for Russia and the Caspian, told an energy conference.
Turkmenistan, a reclusive Central Asian state of 5 million people, holds the world's fourth-largest natural gas reserves and is seeking to diversify exports from Soviet-era master Russia to China, Iran and Europe.
Berdymukhamedov, who wields virtually unlimited powers in Turkmenistan, is pinning the future prosperity of his desert nation on developing multiple gas export routes. Gas from South Iolotan could flow to China and also in a westward direction.
GCA estimated in 2008 that South Iolotan could contain between 4 trillion and 14 trillion cubic metres (tcm) of gas-in-place, which at the time ranked it potentially as the world's sixth-largest natural gas deposit.
Turkmen government officials attending a conference in a Caspian Sea resort on Wednesday said that the state now estimated reserves at South Iolotan to be equal to 21 tcm.
Holding declined to reveal the revised GCA estimate prior to telling the president. The auditor had originally been due to complete its work during the spring.
"It gradually became obvious that the considerable volume of new data which had been made available clearly demonstrated a very significant increase in the overall size of the South Iolotan structure," he said.
Holding said new seismic data and wells drilled had proven that South Iolotan and the adjacent Osman filed were actually a single structure.
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Turkmenistan plans to more than treble gas output to 230 billion cubic metres annually by 2030, of which 180 bcm will be exported. South Iolotan, which sprawls over 3,000 sq km about 350 km (220 miles) southeast of the capital Ashgabat, will supply a large portion of this increase.
Four companies -- Chinese state oil and gas firm CNPC, Petrofac Emirates (PFC.L) and South Korea's LG International Corp (001120.KS) and Hyundai Engineering Co (000720.KS) -- won $9.7 billion worth of contracts in December 2009 to develop the field. They will drill and build gas plants.
"The South Iolotan field is so big that it can sustain several developments in parallel," Holding said.
China, which has pledged over $8 billion in loans to Turkmenistan in the last two years, is well-positioned to take a large proportion of the gas that will eventually be pumped from South Iolotan.
China took more than 4 billion cubic metres (bcm) of Turkmen gas last year via a pipeline that snakes nearly 2,000 km (1,250 miles) through Central Asia into its northwestern Xinjiang region. Turkmenistan has said supplies could rise to 17 bcm in 2011 and 20 bcm in 2012.
Another future option for Turkmenistan would be to deliver gas via its own East-West pipeline to the Caspian shore, from where it could cross the sea to Azerbaijan and link up with the planned Southern Corridor to Europe.
The European Union on Wednesday reiterated its desire to boost energy ties with Turkmenistan as it seeks alternative gas suppliers to cut its reliance on Russia.
"Europe and Turkmenistan are moving to take their energy cooperation to a higher level," Norbert Jousten, ambassador and head of the delegation of the European Union to Kazakhstan, told the conference.
"The export of Turkmen gas to Europe is a goal we share," he said. "Our approach is to maximise diversification, to make sure that the risk of total gas cut-offs is avoided." (Writing by Robin Paxton)
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