Central Asian country offers cheaper solution to Gazprom to send gas to new markets
Оригинальный текст опубликован на сайте «Upstream», 10 November 2023 10:05 GMT . Автор: Материал доступен по .
Kazakhstan will seek to strengthen its role as transit country for Russian natural gas shipments to Central Asia and possibly to China and Pakistan before committing to long-term gas supply agreements with gas giant Gazprom, the country’s top officials told Russian President Vladimir Putin on his visit to Astana on Thursday.
Kazakh President Kassym-Jomart Tokayev set the tone by publishing his remarks in a Moscow-based newspaper on the eve of the Putin’s visit, writing that “we are interested in making the full use of our transit potential and are ready to further increase the volume of Russian gas transportation”.
Moscow-based news agency Interfax quoted Gazprom executive chairman Alexei Miller as saying that the company will join forces with Kazakhstan to engage in a large scale upgrade of a legacy gas pipeline corridor, known as Central Asia-Center (CAC).
These upgrades should be completed by 1 November 2025, according to Miller.
Earlier this year, the CAC pipeline underwent three months of upgrade work, allowing the reverse of flow of one of the four lines of the system to deliver gas from Russia across Kazakhstan to Uzbekistan.
Gazprom started transit gas supplies via Kazakhstan to Uzbekistan earlier in October under a short-term contract to supply about 2.8 billion cubic metres of gas per annum to the largest nation by population in the former Soviet region.
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The CAC system consists of four separate lines that travel through Kazakhstan and fork into Uzbekistan, Turkmenistan, Tajikistan and Kyrgyzstan.
Commissioned in several phases in the 1960s and 1970s, the network was designed to carry a maximum annual volume of 80 Bcm of gas from fields in Central Asia to the central part of Russia, rather than in the opposite direction.
After a steep reduction in Russian gas pipeline exports to Europe last year, Gazprom has been reported as having spare production capacity of 100 Bcm of gas per year.
The gas giant hopes China may buy about 50 Bcm of gas per annum via the yet-to-be built Sila Sibiri 2 pipeline from West Siberia across Mongolia, expected to come on stream not earlier than in 2030.
However, a partner at Moscow-based energy consultancy RusEnergy, Mikhail Krutikhin, has estimated that Gazprom may need to spend as much as $100 billion on Sila Sibiri 2 because of the length of the pipeline and the remote locations where it will have to be built.
The company may struggle to arrange financing of Sila Sibiri 2 given its already precarious situation. In its latest financial update, it indicated issues with reducing marketing and administration costs despite a strong decline in its gas output and associated revenues.
Meanwhile, upgrades to CAC will involve work at existing pumping stations and the installation of new metering stations, rather than laying thousands of kilometres of new pipelines for Sila Sibiri 2.
Kazakh gas deal
Miller also said that Gazprom expects a key feasibility study “to be completed within one month that will give an answer to the technical feasibility of a project to deliver Russian gas to eastern and northeastern regions of Kazakhstan and [the project’s] economic efficiency”.
Astana has indicated previously that it may agree to a long-term deal with Gazprom to supply Russian gas to these regions that are too remote far from the country’s existing gas fields in the west and centre.
But despite earlier suggestions that imports from Russia would start this year, Kazakh Energy Minister Almasadam Satkaliyev said this week that the country foresees to pass this winter season without such volumes.
Kazakhstan depends on Russia for its oil exports to international markets, with an estimated 95% of its oil shipments passing through the country.
The country also enables the annual transit of over 73 million barrels of Russian oil across its northeastern part to reach China.