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UPDATE 1-Uzbekistan aims to join China gas supply route in 2012
May 17, 2012 / 2:55 PM / 5 years ago

UPDATE 1-Uzbekistan aims to join China gas supply route in 2012

5 Min Read

* Uzbekistan says legal issues delay its gas supplies to China

* Uzbektransgas: 2012 China shipments seen at 2-4 bcm

* IEA sees Central Asian gas boosting global energy security

* Says boosting energy efficiency will spare more gas for export (Adds Uzbek, IEA comments and details)

By Dmitry Solovyov

TASHKENT, May 17 (Reuters) - Uzbekistan aims to start pumping natural gas to China this year through a pipeline spanning three Central Asia states, gaining access to a supply network key to diversifying supplies from the ex-Soviet region, a senior Uzbek official said on Thursday.

The Central Asian pipeline network, launched in 2009, runs nearly 2,000 km (1,250 miles) from Turkmenistan through the former Soviet neighbours of Uzbekistan and Kazakhstan before reaching China's northwestern Xinjiang region.

Turkmenistan, which holds the world's joint fourth-largest natural gas reserves, is to date the sole supplier to the China-bound pipeline, although both Uzbekistan and Kazakhstan have plans to send gas via this route.

"We can start shipping our gas right now, but there are some legal issues which need to be settled," Tulagan Zhurayev, head of Uzbek state-controlled gas transportation firm Uzbektransgas, said on the sidelines of an industry conference.

"We haven't started shipping gas yet," he said. "We plan this year to supply between 2 billion cubic metres (bcm) and 4 bcm. We have the gas and everything is ready."

Uzbekistan, a mainly Muslim nation of about 30 million, is seeking a place in the lucrative gas trade with fast-growing China and some Uzbek officials have said eastward shipments of the country's gas are set to reach 10 bcm in 2013.

Zhurayev declined to comment on this figure. "Supplies are definitely set to expand next year," he said, "but so far more realistic talk is of between about 2 bcm and 4 bcm this year."

'Ideal Location'

Ulrich Benterbusch, director of the Global Energy Dialogue at the International Energy Agency, told the conference Central Asian gas producers were "ideally located" to supply pipeline gas to China, India and the European Union.

In 2010, China became the fourth-largest natural gas user in the world, and its demand for the fuel last year - estimated at 130 bcm - could double by 2020 and even by 2015, he said.

"There's no doubt that China will absorb imports from Central Asia at a level of about 80 bcm to 200 bcm by 2025, even if Russia exports gas to China by 2020," Benterbusch said.

"We thus welcome very much Central Asia's growing supply commitments to China, because it's not only important for China's energy security, but also for global energy security."

The China-bound pipeline had originally been expected to reach annual capacity of 30 bcm in 2012. State-run China National Petroleum Corp (CNPC) has said it plans to increase the capacity of the pipeline to around 60 bcm by 2015.

Nurbol Sultan, head of Kazakh state gas transportation company KazTransGas, said in April that Turkmenistan was set to supply 9 bcm of gas to China this year, rising to 10 bcm in 2013 and 15 bcm annually starting from 2014.

Like its neighhbour Turkmenistan, reaching China's market is an opportunity for Uzbekistan to diversify its gas exports away from its traditional market, Russia.

Russia buys up the bulk of Uzbek natural gas, which is exported via a Soviet-era pipeline network. Small volumes are shipped to Kazakhstan, Kyrgyzstan and Tajikistan.

Official data show Uzbekistan produced 63.04 bcm of natural gas last year, or 4.4 percent less than in 2010.

Zhurayev told Reuters Uzbek gas exports were expected to rise to 15 bcm this year from 12 bcm in 2011.

IEA's Benterbusch said the depletion of older gas deposits in Turkmenistan and Uzbekistan meant the countries would need to attract large investment to develop new and complex fields.

He also said much more gas from Central Asia would become available for export when these former Soviet economies became more efficient in their energy use.

"The high energy intensity and inefficiency of gas consumption in Central Asia is a strategic challenge," he said. "Energy consumption in Central Asia could be cut by more than half." (Editing by James Jukwey and Robin Paxton)

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