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Kazakhstan is negotiating an increase in natural gas exports to China including via a new pipeline, Bloomberg has reported, noting this would put Kazakhstan in a competition with Turkmenistan and Russia.
“Despite reports of an economic slowdown in China, the demand for gas continues to grow,” Sanzhar Zharkeshov, chief executive officer at Kazakh national gas operator QazaqGaz, told Bloomberg. “We hope to reach a consensus on increasing our export volumes to China and possibly other countries like Uzbekistan.”
To date, Kazakh natural gas exports to China are quite modest, at 4 billion cu m annually. This represents almost all of the country’s natural gas exports, which stood at a little over 5 billion cu m as of December last year. For context, Kazakhstan itself consumes 21 billion cu m of gas annually. However, the country wants to boost both domestic supply and export supply for additional revenues. China is the natural top target for those additional revenues.
To enable higher exports, the Kazakh state is working with oil and gas producers in the Caspian Sea to motivate higher production. One measure to do this is a new gas price formula, QazaqGaz’ Zharkeshov told Bloomberg. The government also plans to boost production by 3.5 billion cu m annually over the next five years with the help of Qatari investors, the Bloomberg report said.
The boost in exports to China would require the construction of a new pipeline link to an already existing conduit that is only being utilized at a rate of 70% of capacity. The new pipeline would cost between $3 billion and $6 billion, according to Zharkeshov. The decision on whether to proceed with the project will be made later this year and construction would take between two and three years.
China last year became the largest importer of liquefied natural gas, taking in the equivalent of 16 billion cu ft daily, the U.S. Energy Information Administration reported in August. Pipeline imports are an important alternative source of gas for the Asian powerhouse as demand continues to grow.
