Moscow — Kazakhstan's national gas shipping company KazTransGaz and PetroChina International Company on Monday inked a five-year contract to double Kazakh natural gas exports to China to 10 billion cubic meters/year from 2019.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The deal comes as Kazakhstan increases gas production, with associated petroleum gas accounting for the bulk of the output, and continues to expand its pipeline infrastructure to ensure greater deliveries to international markets.
Exports of natural gas have become increasingly attractive for the country recently, energy minister Kanat Bozumbayev said earlier this month.
"Gas exports are very beneficial for Kazakhstan. While previously we were to export gas via Russia, now we have new directions, we deliver a significant share [of total exports] to China directly, via direct contracts," he said.
Bozumbayev estimated Kazakhstan's total exports of natural gas in 2018 at 15 Bcm.
Kazakhstan's three giant oil and gas projects -- Karachaganak, Tengiz and Kashagan -- are key sources for the country's gas production, together accounting for over two-thirds of the country's total gas reserves, according to the estimates by the Oxford Institute for Energy Studies.
In the first nine months of the year, gas production in Kazakhstan rose by 5.9% year on year to 41.45 Bcm, according to the State Statistics Service of Kazakhstan data published Monday. Of the total, associated petroleum gas amounted to 24.4 Bcm, up 10.3% year on year.
The country's gas production rose by 14% year on year to 52.9 Bcm in 2017 and was forecast to increase by 1.1% to 53.5 Bcm in 2018. With the three projects' expansion, gas output is set to grow further after 2020.
Kazakhstan started exports of its gas to China in October 2017 under a one-year deal between KazTransGaz and PetroChina for 5 Bcm/year. Previously KazTransGaz sold its gas to Russia's Gazprom for further re-sale, mainly to the states of the former Soviet Union.
Gas to China flows via the Beineu-Bozoi-Shymkent pipeline, running west to southeast Kazakhstan, then linking into the Kazakhstan-China pipeline, part of the larger 7,500-km (4,650-mile) Turkmenistan-Uzbekistan-Kazakhstan-China trunk pipeline.
KazTransGaz expects to expand its internal pipeline infrastructure to facilitate increased supplies to China.
"In the near future, three new high-tech compressing stations will be launched, to increase the capacity of the Beineu-Bozoi-Shymkent pipeline to 15 Bcm/year from 10 Bcm/year," KazTransGaz said in a statement.
"Thus, we'll fully secure domestic demand [for gas] and simultaneously will be able to increase exports to international markets," it said.
KazTransGaz expects that the doubling of gas exports to China to 10 Bcm/year will bring in more than $2 billion/year in revenue.
--Nadia Rodova, firstname.lastname@example.org
--Edited by Alisdair Bowles, email@example.com