Kazakhstan negotiates gas exports, pipeline plans with China

Kazakhstan is studying increasing its gas exports to China  and is willing to construct an additional pipeline to increase flow, Bloomberg reported on Tuesday.

The country is competing with neighbouring countries including Turkmenistan and Russia, which stopped its gas supplies to European customers, and is rushing to Chinese gas market.

“Despite reports of an economic slowdown in China, the demand for gas continues to grow,” said Sanzhar Zharkeshov, chief executive officer at national gas operator QazaqGaz NC JSC. Discussions with China involve “significantly higher volumes” than the current 4 billion cubic metres, while Kazakhstan consumes about 21 billion cubic metres.

To boost output and support producers, QazaqGaz plans to introduce a new gas price formula and collaborate with major producers and Qatari investors to add 3.5 billion cubic metres of output by 2029. Additionally, a second pipeline alongside the Beyneu-Bozoy-Shymkent link is planned to increase deliveries to China, which is operating at 70 per cent capacity.

Zharkeshov noted that QazaqGaz may issue a Eurobond next year for project financing, potentially raising to $1 billion, and is on track for an initial public offering by 2026. “Although China has secured some good liquefied natural gas contracts, the price of LNG is not competitive compared to pipeline gas,” he said. “Therefore, our focus is on fulfilling our obligations to China during this winter season.”

Attribution: Bloomberg

Subediting: M. S. Salama