Kazakhstan is in negotiations with China to expand its gas exports, and it is considering constructing an additional pipeline to increase gas flow, highlighting its growing role in the regional energy market.
Kazakhstan faces competition from neighboring countries like Turkmenistan and Russia for the Chinese market, which has become a vital alternative for Russia since it lost key European buyers following the invasion of Ukraine. Despite reports of a slowdown in China’s economy, the demand for gas remains robust.
Sanzhar Zharkeshov, CEO of QazaqGaz NC JSC, stated, “We are optimistic about reaching an agreement to increase our gas exports to China and potentially other countries, such as Uzbekistan.” The ongoing discussions involve volumes significantly higher than Kazakhstan’s current exports of about 4 billion cubic meters annually.
As the world’s largest landlocked country, Kazakhstan aims to boost gas production to meet domestic needs and increase export revenues. Currently, the country consumes around 21 billion cubic meters of gas annually, and it recently renewed a three-year export contract with China. By increasing exports, QazaqGaz hopes to offset the losses incurred from unprofitable domestic gas sales, where prices are kept low by the government.
Kazakhstan is collaborating with major producers like KazMunayGas, as well as the Tengiz, Kashagan, and Karachaganak fields, to raise gas output. To support producers, QazaqGaz plans to introduce a new gas pricing formula. Additionally, the company is working with Qatari investors to add 3.5 billion cubic meters of gas output by 2029 and exploring new opportunities with Chevron.
QazaqGaz is also planning to construct a second pipeline alongside the existing Beyneu-Bozoy-Shymkent line, which will connect to a larger pipeline transporting gas to China. The current pipeline is operating at 70% capacity, leaving room for increased deliveries. The new pipeline is expected to cost between $3 billion and $6 billion, with construction taking two to three years. A decision on the project is anticipated later this year.
To finance its initiatives, QazaqGaz is considering issuing a Eurobond in 2025, potentially raising up to $1 billion. The company is also on track for an initial public offering (IPO) by 2026, with possible listings in London, New York, and Kazakhstan.
While China has secured competitive liquefied natural gas (LNG) contracts, Zharkeshov noted that LNG prices are still not as favorable as pipeline gas, reinforcing Kazakhstan’s commitment to fulfilling its obligations to China during the upcoming winter season.