Kazakhstan considers building a new pipeline to boost gas exports to China, aiming to strengthen its energy ties with the region’s largest economy. Learn more about Kazakhstan’s gas export strategy.
Kazakhstan Eyes Increased Gas Exports to China
Kazakhstan is exploring ways to expand its natural gas exports to China, with discussions underway about building a new pipeline to boost capacity. As China’s demand for natural gas continues to rise, Kazakhstan sees an opportunity to solidify its position in the regional energy market. The potential new pipeline could strengthen Kazakhstan’s role in supplying one of the world’s largest energy consumers.
According to Sanzhar Zharkeshov, CEO of Kazakhstan’s national gas operator, QazaqGaz, discussions with China involve “significantly higher volumes” of gas exports. This move is part of Kazakhstan’s broader strategy to increase revenue from energy exports while meeting growing domestic demand.
Growing Demand from China
China’s economic growth may be slowing, but its demand for energy, particularly natural gas, remains strong. As China seeks alternatives to coal and oil, natural gas has emerged as a cleaner option. Kazakhstan currently exports around 4 billion cubic meters of gas to China but is looking to significantly increase these volumes.
Zharkeshov mentioned that Kazakhstan is also in talks with other neighboring countries, including Uzbekistan, about potential gas exports, which further underscores the nation’s ambition to become a key player in regional energy supplies.
Kazakhstan’s Competition with Regional Producers
Kazakhstan faces competition from other energy producers like Russia and Turkmenistan, who are also vying for China’s lucrative energy market. Following Russia’s invasion of Ukraine, Moscow has turned its focus to Asia as European buyers have reduced their reliance on Russian energy.
Kazakhstan, the world’s largest landlocked country, must navigate this competitive landscape while boosting its own production to meet both domestic and international demand. The country consumes about 21 billion cubic meters of gas annually and must balance growing internal needs with the revenue potential of exports.
New Pipeline and Investment Plans
To meet China’s growing demand, Kazakhstan is considering constructing a second pipeline alongside its existing Beyneu-Bozoy-Shymkent link, which feeds into a larger pipeline network to China. This new pipeline would cost between $3 billion to $6 billion and could take two to three years to complete, with a decision expected by the end of this year.
Kazakhstan is also working on several projects with Qatari investors and global energy giant Chevron to further increase its gas output. These projects are expected to add another 3.5 billion cubic meters of gas production by 2029. To fund these expansion efforts, QazaqGaz is considering issuing a Eurobond next year, with a potential value of up to $1 billion, depending on market conditions.
Competitive Edge with Pipeline Gas
Kazakhstan believes it holds a competitive edge over liquefied natural gas (LNG) exporters due to the price difference between pipeline gas and LNG. Despite China securing LNG contracts from other countries, the price of LNG tends to be higher compared to gas delivered through pipelines. This provides Kazakhstan with an advantage as it seeks to fulfill its obligations to China during the upcoming winter season.
Domestic Energy Challenges
While Kazakhstan seeks to grow its gas exports, it is also grappling with challenges at home. Domestic gas sales remain unprofitable due to government-imposed low prices. To address this, QazaqGaz plans to introduce a new gas pricing formula aimed at supporting producers while maintaining affordable energy for the population.
The government’s goal is to boost gas production with the help of major producers like KazMunayGas, Tengiz, Kashagan, and Karachaganak fields. Increasing production will help meet growing domestic energy demands while enabling Kazakhstan to continue expanding its export potential.
Future Outlook
Kazakhstan is positioning itself as a key energy player in Central Asia by expanding its gas exports to China. With the potential new pipeline and increased collaboration with global energy companies, the country aims to boost both production and export capacity in the coming years.
As the competition for China’s energy market heats up, Kazakhstan’s ability to strengthen its infrastructure and secure long-term agreements with China will be crucial in maintaining its foothold. The potential for a Eurobond issuance and an IPO in the coming years will provide the financial support needed for these ambitious plans.