Lack of money puts pipeline on hold

June 22. Global Times

Lack of money puts pipeline on holdThe second phase of China-Kazakhstan natural gas pipeline might be put off due to money shortages, the official yicai portal said Monday.

The second phase, estimated at a total length of 1,300 kilometers inside Kazakhstan, connects the country and Korgas city in China’s Xinjiang Uyghur Autonomous Region.

The Kazakh government and China National Petroleum Company (CNPC) have been working on the project since the deal was signed in July 2007. It is seen as a key pipeline that will put energy-hungry China in touch with more gas reserves in Central Asia.

Gas shipments were originally planned to start in 2010 at 4.5 billion cubic meters (bcm) annually, rising to 30 bcm by 2013. The gas had been expected to go to China’s southern regions, which have been suffering from a lack of supply due to high energy demand.

“This project will be postponed and restart construction in August,” cited Sauat Mynbayev, Kazakhstan’s energy minister as saying. “It should be completed by 2013.”

The total cost of the second phase of the 6,500 km pipeline will reach $3 billion, including $500 million provided by CNPC, according to Mynbayev.

CNPC, Asia’s largest oil and gas company, could not immediately be reached for comment.

China made a “loan-for-oil” deal with Kazakhstan giving the Central Asian country $10 billion in cheap loans in exchange for the contract.

According to statistics from CNPC, the total length of China’s oil and gas pipelines reached 9,7000 kilometers as of the end of last year.