Tuesday, 19 June 2012

China has said that it plans to import around 25bcm of Central Asian gas this year, a major increase in the 2011 figure and proof that China is becoming one of the most important destinations for Caspian gas flows.

The head of PetroChina said on 23 May that estimates for this year's imports through the Central Asia-China pipeline were between 23 and 25bcm, almost all of which will come from Turkmenistan. Although Uzbekistan has pledged 10bcm a year to the pipeline the actual figure has remained extremely low. Last month Uzbektransgas said that unspecified legal issues were delaying the shipment of Uzbek gas through the pipeline, but that it would contribute around 2-4bcm this year. Supplies are expected to increase next year.

The figures are a sharp rise on previously predicted exports to China. Although Ashgabat has been opaque on its own export plans, in April the head of Kazakhstan's KazTransGas said that its southern neighbour was expected to ship 9bcm to China this year. Even allowing for some additional gas from Kazakhstan itself alongside this, the new figure from PetroChina would represent almost a doubling of anticipated exports.

To lock in these imports, Turkmengaz signed an agreement this month with CNPC to boost its gas exports to China up to 65bcm, according to Turkmen TV. The framework cooperation agreement was inked by new Deputy Prime Minister (see below) and state hydrocarbon agency boss Yagshygeldi Kakaev and the chairman of CNPC's board Jiang Jiemin in Beijing on 7 June.

Ramping up to 65bcm would be a major undertaking, and no details were given on the timeframe for the increase or the sources of gas (earlier reports suggested that Chian was aiming for 60bcm from Central Asia as a whole by 2015). At a speech

It marks yet another increase in the scale of Turkmen gas exports to China, suggesting that Beijing's attempt to lock in most of Turkmenistan's upcoming production is bearing fruit. Chinese demand will almost certainly support it: the International Energy Association said that Chinese gas demand is expected to double in the next five years. Central Asian gas is expected to satisfy a sizeable chunk of this. The main constraints are the pace at which China's internal pipeline network can be developed, and the ability of Turkmenistan to bring new gas fields on in time.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2012 Menas Associates

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