Kazakhstan seeks key gas role in Central Asia

Feb 16, 2002 01:00 AM

Kazakhstan, which has already set its heart on becoming a major oil player once its huge fields are developed, is also eyeing a key role in regional gas transit and its own production, officials said. The country is already investing in upgrading a Soviet-built trans-regional gas pipeline which is the only route West. It also wants gradually to build its own gas output.
"Currently the future of all gas projects in Central Asia is closely linked to the pipeline running through our territory," the first deputy head of gas pipeline monopoly KazTransGaz, Daniyar Berlibayev, told. "We are watching the ongoing gas liberalisation in Europe and we would like one day to reach directly European consumers. I think we are gradually moving toward this", he added.
Kazakhstan hopes the transit will build as Russia, where output is falling, takes gas from Turkmenistan, which sits on world's third largest gas reserves. The gas goes through the Central Asia-Centre line from Turkmenistan, to Uzbekistan and Kazakhstan. Turkmenistan is to ship 40 bn cm of gas to Ukraine via Russia in 2002 and 10 bn cm to Russia itself.

Such deals are currently being renegotiated every year in tough talks which often stall. However, Gazprom, the world's biggest gas firm with an annual output of above 500 bn cm, wants to secure long-term deals with Turkmenistan. They would give the company surety of supply and also allow it to postpone the extremely expensive development of new Arctic onshore fields and offshore areas of the Barents Sea.
Such long-term deals would also benefit Kazakhstan and it has already invested in modernising gas pipes on its territory. KazTransGaz will invest $ 500 mm by 2005 in upgrading its transit pipeline, having spent $ 170 mm last year. "We will be ready to ship up to 80 bn cmpy of Turkmen gas by 2005", Berlibayev said. Capacity now stands at 50 bn cm.
But the future of long-term deals also depends on whether Gazprom will agree to open its export pipelines to other producing nations. Although Gazprom is eager to keep its export monopoly, there have been signs of movement. Berlibayev said KazTransGaz and Gazprom were already establishing a joint gas marketing venture and that Kazakhstan had also sold small volumes of gas to other ex-Soviet nations.

Western oil majors, developing two giant onshore fields in Kazakhstan, Tengiz and Karachaganak, and exploring the Caspian, which experts say could one day yield as much as the North Sea, are also closely watching gas developments. "Karachaganak currently mainly produces liquids, but in 10 years our gas output will skyrocket. We have to think about our potential gas markets now", a source in a European major said.
Berlibayev said Kazakhstan would boost its gas output to 50 bn cm by 2015 from 14 bn this year and increase exports to some 35 bn cm from a mere 3 bn cm now. He said recent developments in the oil industry had shown Russia could be flexible over exports. This was demonstrated by the fact that it had allowed Kazakhstan to boost its crude exports to Europe via Russia to 15 mm tons in 2001 from just 5 mm tons several years ago.

Meanwhile, Kazakhstan's key gas pipeline company said it might issue $ 100 mm of Eurobonds this year, joining other Kazakh issuers which have tapped or are intending to tap the market. Like other former Soviet nations, companies in Kazakhstan have a growing need for funds for investment and modernisation. KazTransGaz, which runs the country's gas pipeline, said it hoped to borrow this year.
"An issue might take place sometime in mid-2002," the company's first deputy head, Daniyar Berlibayev, said. He said KazTransGaz planned to invest up to $ 200 mm in upgrading its pipeline network and putting a new gas field onstream in southern Kazakhstan this year.
Another energy-related firm, state oil company, Kazakhoil, launched EUR 125 mm of five-year bonds earlier. National railway company, Kazakhstan Temir Zholy, is also considering plans to borrow EUR 100 mm to 150 mm in or dollars through a five-year Eurobond.

Source: Gulf News Online
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