Kazakhstan's State Gas Company to Increase Exports to China

Kazakhstan's Qazaqgaz has reached an agreement to increase its natural gas deliveries to PetroChina International, ensuring higher revenues for the Kazakh state-owned gas pipeline operator and producer.

Qazaqgaz said in a statement on Wednesday that executive chairman Sanzhar Zharkeshov and PetroChina International chairman Junli Wu signed an addendum to the companies’ three-year natural gas purchase and sale agreement during a Kazakh-Chinese business forum in Astana, The Caspian Post reports citing foreign media.

“The document provides for adjustments to the parameters of Kazakh gas exports to China in 2025,” the company said.

Qazaqgaz and PetroChina International have not revealed the new agreed delivery volumes.

Following the initial agreement in 2023, Kazakh Energy Minister Almasadam Satkaliyev said his country will aim to export between 4.5 billion and 5 billion cubic metres of gas to China using the existing transit pipelines between China and Turkmenistan that cross Kazakhstan.

However, Qazaqgaz also warned in the same year that it will reduce or halt gas exports to China during the winter of 2023/2024 to help ease the rapidly rising domestic gas demand in Kazakhstan.

A Qazaqgaz spokesperson told Upstream that the company had earlier “fulfilled all gas delivery commitments under the contract” with PetroChina.

The spokesperson added that Qazaqgaz is unable to reveal the agreed volume of gas supplies to China because “commercial matters cannot be disclosed”.

PetroChina’s input to Qazaqgaz’ revenues

With the Kazakh government regulating the upper limit of the gas price for the domestic consumers, making it a cheap energy source and stimulating its consumption, gas exports to China provide higher revenues for each cubic metre sold against domestic deliveries, Qazaqgaz said earlier in its financial reports.

In 2017, Kazakhstan agreed to export up to 10 Bcm per annum of gas to China, but this volume was never achieved.

Supplies peaked at 5.9 Bcm in 2021 before declining, according to governmental disclosures in Astana.

In a note to shareholders last November, Qazaqgaz said the 2023-2026 gas agreement with PetroChina may generate total revenues of $5.6 billion.

In its latest available consolidated financial report, Qazaqgaz revealed that half of its total revenues of almost 594 trillion tenge ($1.2 billion) in the first half of 2024 were payments from PetroChina, compared with 52% during the same period of 2023.