Kazakhstan’s gas outlook: has it overcommitted to China? Report

Insight 13 September 2019

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Report summary

Kazakhstan’s gas sector is coming of age. In 2018, state-owned KazTransGas signed a five-year export deal to deliver up to 1.0 bcfd (10 bcm per year) to China in 2019-23. The scale of the new export commitment cannot be overstated. It represents nearly one-third of Kazakhstan’s marketed gas output and is almost on par with current domestic demand (1.5 bcfd). This has led to concerns – in both Kazakhstan and China – about the Central Asian producer’s ability to deliver on the contract in full.

Executive summary
A new piece of the China gas supply mix
Volume growth, but an increasingly blurry strategy
- Where will further growth come from?
- Tengizchevroil
- Karachaganak
- Kashagan
Gas economics are still a work in progress
- A lack of commercial incentives
- A range of commercial obstacles
Conclusion: a new roadmap is needed
- Price transparency and incremental reform
- Incentives for upstream cooperation
- Evaluation of new approaches