(Bloomberg) — Kazakhstan is in talks with China about rising fuel exports and is even contemplating constructing an extra pipeline to spice up flows, underscoring the rising significance of its function within the area’s gasoline market.
Kazakhstan shall be competing with neighboring nations together with Turkmenistan and Russia for Chinese language demand. Moscow’s invasion of Ukraine practically three years in the past led to it chopping off main patrons in Europe, with China changing into a key various market even amid sputtering financial momentum.
“Regardless of stories of an financial slowdown in China, the demand for fuel continues to develop,” stated Sanzhar Zharkeshov, chief govt officer at nationwide fuel operator QazaqGaz NC JSC. “We hope to achieve a consensus on rising our export volumes to China and presumably different nations like Uzbekistan.”
The operator’s discussions with China contain “considerably larger volumes” than present Kazakhstan exports, he added.
The world’s largest landlocked nation is in search of to spice up fuel manufacturing to cowl rising home demand in addition to enhance income from exports. It sends about 4 billion cubic meters of fuel to China for the time being, whereas consuming about 21 billion cubic meters itself. In 2023 the 2 nations renewed a three-year export contract.
Boosting gasoline deliveries overseas may assist QazaqGaz compensate for unprofitable home gross sales, the place promoting costs are stored low by the federal government.
The operator is working with main producers — together with state-owned KazMunayGas Nationwide Co JSC and the Tengiz, Kashagan and Karachaganak fields — to boost output. QazaqGaz will introduce a brand new fuel worth method aimed toward supporting producers, Zharkeshov stated.
It’s additionally working with Qatari traders on initiatives that can add one other 3.5 billion cubic meters of fuel output by 2029, in addition to on exploration actions with Chevron Corp., he stated.
As well as, QazaqGaz plans to construct a second pipeline alongside its Beyneu-Bozoy-Shymkent hyperlink, feeding into a bigger pipe to China.
The latter is at present working at about 70% of capability, leaving some room for extra deliveries, he stated. The brand new pipe feeding into it will price between $3 billion to $6 billion, and will take two to 3 years to finish, with a call due later this 12 months.
QazaqGaz might challenge a Eurobond subsequent 12 months to finance its initiatives, Zharkeshov added, with a possible issuance of as a lot as $1 billion relying on market situations. He stated the operator stays on observe for an preliminary public providing by 2026, probably itemizing in London, New York, and Kazakhstan.
“Though China has secured some good liquefied pure fuel contracts, the worth of LNG isn’t aggressive in comparison with pipeline fuel,” he stated. “Due to this fact, our focus is on fulfilling our obligations to China throughout this winter season.”
