Uzbekistan, China sign major gas pipeline deal

By Staff
|
Google Oneindia News

Tashkent, May 1: Uzbekistan plans to build a gas pipeline to China with a capacity of 30 billion cubic metres a year, equivalent to half the Central Asian state's gas production, the Uzbek government said in a statement.

The statement said Ma Kai, the head of China's top state planning body, and Uzbek Deputy Prime Minister Rustam Azimov signed an agreement in Tashkent on Monday about the principles of building and running a pipeline along the route.

''It would be 530 km long and have a throughput capacity of 30 billion cubic metres of the resource every year. The project includes a plan to bring two compressor stations on stream,'' the statement said.

The statement did not give a time frame or name participants in the project. Earlier this month an Uzbek government source said China's Sinopec Corp. had pulled out of a project to explore new Uzbek projects and revitalise stalled projects with state energy firm Uzbekneftegas.

The source said Uzbekistan would focus instead on cooperation with another Chinese oil major, China National Petroleum Corp.

Uzbekistan has traditionally supplied gas not to China but to Russia, where pipeline monopoly Gazprom controls pipeline networks threading into the lucrative European market.

Although the European Union would love to tap the growing supplies of gas in Central Asia, Gazprom's control of the intervening pipelines stops European buyers doing deals directly and allows Russia to control the market for Central Asian gas.

Despite its vast size, Gazprom is itself keen to buy the region's gas to shore up its own reserves.

The European Union has further distanced itself by criticising Uzbek human rights, while Russia and China, desperate to find more fuel for their roaring economies, openly courted Uzbekistan and its gas-rich neighbour Turkmenistan.

However, neither country shares a border with China, and it was not clear whether the pipeline would traverse Kyrgyzstan, Tajikistan or Kazakhstan to reach its destination.

Although there are also huge physical obstacles -- mountains and deserts -- a pipeline could diversify China's energy supplies while allowing Uzbekistan to break free of Gazprom's control and play China and Russia off against each other.

Gazprom is already moving fast to enter the Asian market, building pipelines with a capacity of 60-80 bcm to China.

It has also just bought 50 percent of the huge Sakhalin-2 liquefied natural gas project, previously controlled by Shell , which will mainly supply South Korea and Japan.

Its export monopoly also means it holds sway over several other big potential China supply projects, including the Kovykta gas field operated by BP's joint venture TNK-BP.

Last year Uzbekistan produced 62 bcm of gas and exported 12.6 bcm. Gazprom bought 9 bcm and the remainder went to Kazakhstan, Kyrgyzstan and Tajikistan.

The bulk of Uzbekistan's production is consumed by its population of 26 million. It was not immediately clear how the country plans to free up enough gas to fill a 30 bcm pipeline, almost as much as is used in a year by, for example, Spain.

Reuters >

For Daily Alerts
Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
X