Kazakhstan To Export Up To 5 Bcm/year Of Natural Gas To China As Of 2017

Kazakhstan To Export Up To 5 Bcm/year Of Natural Gas To China As Of 2017

Kazakhstan is to debut gas exports to China under a memorandum of understanding signed Wednesday between KazMunaiGaz and CNPC, with up to 5 Bcm/year set to be moved to China from Kazakhstan in 2017-2018, national gas transportation operator KazTransGaz said in a statement.

The MoU follows up on a previous plan to start supplies this year, with a 45% expansion of the Kazakhstan-China pipeline to 55 Bcm/year earmarked for completion in 2017.

“The sides discussed the possibility of natural gas supplies from Kazakhstan to China in 2017-2018, and agreed to sign the sales and purchase agreement on Kazakh gas exports in the volume of up to 5 Bcm [per year],” KazTransGaz said.

Kazakhstan currently exports no gas of its own to China, the country’s energy ministry said.

China will receive gas at Khorgos on the border between the two countries, according to the MoU, which also defines the volumes, price and quality of the product, the company said, without providing further details.

“The diversification of transit and export routes of Kazakh gas, as well as increasing export volumes of blue fuel are important strategic tasks that were set by the head of state,” Kairat Shripbayev, chairman of KazTransGaz’s board of directors, said in the statement.

Gas exports are expected to further firm cooperation between the neighbors, which already cooperate in the upstream oil and gas sector, along with services and oil and gas transportation in Kazakhstan, according to the statement.

“Supplies of Kazakh gas to China will help bilateral mutually beneficial relations, as well as joint promotion of cooperation relations as part of the ‘One belt, one road’ initiative, aimed at creating infrastructure and firming trade and transport ties between Eurasian countries,” the company said.

The construction of compressor stations on the third line of the pipeline intended for gas transportation to China foresees 20 Bcm/year transit volumes of Turkmen and Uzbek gas, in addition to Kazakh volumes, according to KazMunaiGaz, which controls KazTransGaz and 95% of the country’s gas transportation.

Volumes from Turkmenistan and Uzbekistan are transported through the Central Asia-China gas pipeline network that links with CNPC’s Second West-East Pipeline in western Xinjiang province at the border with Kazakhstan.

Kazakhstan’s gas production is expected to rise by 3.2% on the year to 48.1 Bcm this year, mainly from the Kashagan, Karachaganak and Tengiz fields, the country’s energy minister Kanat Bozumbayev estimated earlier this year.

Kazakhstan’s joint project with China to expand the capacity of the Beney-Bozoy-Shymket pipeline, running from the west to southeast Kazakhstan, to 10 Bcm this year “will allow to start exports of [Kazakh] gas to China,” he said, adding, however, that Kazakh gas will face strong competition from Turkmen, Uzbek and Russian future gas supplies under long-term contracts with China.

Besides, Kazakhstan prioritizes domestic supplies as it expects further natural depletion at its key fields by 2025, according to the energy ministry.

Kazakhstan also needs gas for reinjection to maintain rock pressure for crude oil production.

Source: Platts