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Petroleum industry

Western China to Benefit from Gas Supply Competition

Strategic Insights

— 1 min read

As China looks to increase its natural gas supply through its western borders, the country is likely to benefit from competition between Turkmenistan, Kazakhstan, and Russia. Kazakhstan's KazMunayGas (KMG) is planning to construct a pipeline to China, while Russia's Gazprom is also vying for a share of the market. Meanwhile, Turkmenistan has also expressed its readiness to begin deliveries to China as early as 2009.

Key Takeaways:

  • Kazakhstan's KazMunayGas plans to construct a gas pipeline to China with an estimated throughput of over 30 billion cubic meters per year by 2009.
  • Kazakhstan is capable of boosting gas output to 74.3 billion cubic meters per year by 2015 with significant investment and infrastructure development.
  • China's negotiations with Kazakhstan have forced Russia's Gazprom to consider alternative routes to supply gas to western China, including a commitment to deliver western Siberian gas to Xinjiang via Altai Province by 2011.
  • Gazprom has an effective monopoly over gas supplies to eastern China, making it difficult for other companies to compete.
  • Turkmenistan is also ready to begin deliveries of natural gas to China as early as 2009, raising the potential for competition in the western Chinese market.
  • China's strong economic and political relationship with Kazakhstan could help develop the central Asian country's gas resources.
  • The total estimated gas reserves in western China, controlled by Turkmenistan, are approximately 30 trillion cubic meters.

Statistics:

  • 30 billion cubic meters per year: estimated gas throughput of Kazakhstan's pipeline to China by 2009.
  • 74.3 billion cubic meters per year: potential gas output in Kazakhstan by 2015 with significant investment and infrastructure development.
  • 2011: expected year of delivery for western Siberian gas from Russia's Gazprom to Xinjiang Province via Altai Province.
  • 2015: expected year of targeted gas output in Kazakhstan.
  • 30 trillion cubic meters: estimated total gas reserves in western China, controlled by Turkmenistan.

Sources:

  • INTERFAX-CHINA, Beijing. November 9.
  • China Gas Summit, attended by Mussabek Issayevich Issayev, Director for Gas Projects, KazMunayGas (KMG).
  • Royal Institute of International Affairs, cited by Keun-Wook Paik, regional energy analyst.
  • GAZPROM, cited by Deputy CEO Alexander Medvedev in June.

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