UAE's Dragon Oil said it is in talks with Turkmenistan on its potential involvement in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline project.

Ashgabat plans to begin construction of the $10 billion, 1,735-km pipeline next month in order to diversify exports away from China and Russia. It remains unclear how the project will be financed.

Dragon Oil, which produces about 100,000 barrels per day of oil equivalent from two fields in the Caspian Sea just off the Turkmen coast, provided no details of the potential deal.

"There are some negotiations on the TAPI going on between Dragon Oil and Turkmenistan government... no specific agreement has been reached at this point yet," the company quoted Faisal Rabee Al Awadhi, its general manager in Turkmenistan, as saying in a written response to a question from Reuters .

Chevron , ExxonMobil , BP and Total have expressed an interest in TAPI in the past, but the lack of access to Turkmen gas deposits and other concerns, such as security, have meant none have committed fully to the project.

Turkmenistan's official policy is to only sign production-sharing agreements with foreign companies for offshore fields, while for its main, onshore deposits, it invites foreign firms as contractors, meaning those companies cannot count their reserves as assets.

Dubai-based Emirates National Oil Company (Enoc) took over Dragon Oil in August.

It is owned by the Dubai government and operates service stations, fuel terminals and oil tankers as well as a refinery.-Reuters