Kazakhstan to increase pumping through Kazakhstan – China pipeline to 14 mln tons in 2014

Nov. 8. Trend. Astana

By D. Mukhtar

Kazakhstan to increase pumping through Kazakhstan - China pipeline to 14 mln tons in 2014Kazakhstan is planning to pump 14 million tons of oil via the Kazakhstan – China pipeline in 2014, the General Director of JSC KazTransOil Kairgeldy Kabyldin told reporters.

“As for the expansion of the Chinese pipeline, we have reached the expansion to 14 million tons in the section Atasu – Alashankou. Last year, we were able to pump 12 million tons through it. Expansion of this area under a transit oil, that we are planning to get in late 2013, will be completed in 2014, “Kabyldin said.

Atasu – Alashankou pipeline with a capacity of 10 million tons was launched in 2005. The design capacity has to be 20 million tons. According to the agreement with China, the capacity in Atasu – Alashankou sector is planned to reach 20 million tons a year in 2014.

According to him, as to construction of the entire pipeline system from Atyrau to Alashankou, negotiations are currently being held with China on commercial terms and mutually acceptable balance.

“These negotiations will be completed this year. Expansion in the area from Atyrau to Atasu is scheduled to begin in 2013 and be completed in 2014,” Kabyldin said.

These negotiations will affect the issues of the resource base provision, the definition of commercial parameters, in particular tariffs.

“Today, about 100 billion tenge (150.64 tenge = $ 1) are required to bring the capacity of Atyrau – Alashankou section to 20 million tons ,” the head of KazTransOil stated..

He did not rule out the possibility of using the funds from the sale of People’s IPO campaign for the construction of the pipeline.

“Funds from the IPO will in the first place be invested in the reconstruction and modernization of our assets that are absolutely controlled by KazTransOil in order to ensure their effectiveness. If we see that the Chinese project also provides a guaranteed return on investment, of course, we will consider using funds from the IPO, ” Kabyldin said.

KazMunaiGas together with the China National Petroleum Corporation is working on the project on construction of the Kazakhstan-China pipeline, the implementation of which will connect the two separate oil pipeline systems in the Republic of Kazakhstan and ensure the supply of hydrocarbons to the promising Chinese market.

In the first place, the construction of the Kazakhstan-China aims to diversify the oil transportation directions in the framework of the policy on creation of a multi-vector system for transportation of hydrocarbons of independent Kazakhstan.

The construction of the Kazakhstan – China oil pipeline is planned in two phase. The first phase was the implementation of the project Atasu – Alashankou, the construction of which was conducted in accordance with the Framework Agreement between the Government of the Republic of Kazakhstan and the Government of the People’s Republic of China on the development of comprehensive cooperation in the field of oil and gas (Beijing, May 17, 2004).

JSC KazTransOil and the China National Corporation for exploration and development of oil and gas (a subsidiary of CNPC) formed Kazakhstan-China Pipeline on a parity basis in order to build the pipeline.

Route length of Atasu-Alashankou pipeline is 962 km. The pipeline diameter is 813 mm. The capacity of the first phase is 10 million tons per year, with further expansion to 20 million tons a year. The route of the pipeline passes through three areas: Karaganda, East Kazakhstan and Almaty to final Alashankou in China. The project is financed by debt financing guaranteed by the Chinese side. First launch complex was commissioned in July 2006; the construction is fully completed in 2008.

Some 10.1 million tones of oil were transported through the Atasu-Alashankou in 2010, 5.8 million tons of oil with anti-friction additives – for the first half of 2011.

The project of building the Kenkiyak-Kumkol oil pipeline with capacity of 10 million tons per year is the first stage of the second phase of the project of construction of the Kazakhstan-China oil pipeline. It is performed in accordance with the Agreement on basic principles of construction of the second phase of the Kazakhstan-China oil pipeline between China National Petroleum Corporation and equity Society NC KazMunaiGas of December 20, 2006 on a parity basis with the Chinese side, by Kazakhstan-China Pipeline.

Kenkiyak-Kumkol oil pipeline with length of 794 km and a diameter of 813 mm pass through the territories of Aktobe, Kyzylorda and Karaganda regions of Kazakhstan. Throughput capacity of the pipeline is 10 million tons per year, expandable to 20 million tons a year. The project was financed by debt financing guaranteed by the Chinese side. Launch complex was commissioned in October 2009; the construction of the first stage of Kenkiyak-Kumkol pipeline is fully completed in December 2010.

It is planned to achieve full design capacity – 20 million tons per year at Alashankou in the frame of the second phase.

The construction of pumping station 11 of Atasu – Alashankou oil pipeline began in the frame of agreement reached in 2010. Commissioning of the NPC 11 will increase the capacity of the pipeline to 12 million tons a year.

Some 30.8 million tons a year was transported through Atasu-Alashankou since commissioning.