Transcript Andrew Neff_KIOGE_ENGx

New Gas Supply Infrastructure in
Kazakhstan and Central Asia
Andrew Neff
IHS, Senior Energy Analyst
20th Anniversary
Kazakhstan International Oil & Gas Conference
4-5 October 2012
Kazakhstan Gas: Main Points
• Kazakhstan is surrounded by other gas producers with larger gas
reserves, more gas production
• Hence, finding outlets for Kazakhstan to monetise its own gas output is more
difficult…or is it?
• Investments in gasification are geared to supply domestic energy
needs, develop system for potential future exports
• What markets are there for Kazakhstan’s gas production?
• Kazakhstan is better positioned than Uzbekistan and
Turkmenistan to supply gas to Russia…and eventually (maybe)
to Europe
• Direction of Central Asian gas transit via Kazakhstan is changing
• Trans-Caspian Pipeline: premature, but not out of the question
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Central Asia: Gas Production and Exports Compared
Kazakhstan
Gas Production,
2007-2012 (Bcm)
Gas Exports,
2007-2012 (Bcm)
Uzbekistan
Turkmenistan
80
Kazakhstan
Uzbekistan
Turkmenistan
60
70
50
60
40
50
40
30
30
20
20
10
10
0
2007
2008
2009
Source: IHS CERA
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2010
2011
2012
0
2007
2008
2009
2010
2011
2012
Existing and Proposed Gas Infrastructure
Source: Intergas Central Asia
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Kazakhstan’s Gas ‘Role’ in Central Asia…So Far
• Primary role as transit state for other exporters
• ~80% of transportation volumes are international transit (~10% exports,
~10% domestic market)
• Transportation volumes still not recovered to pre-crisis level
• Impact of Gazprom dispute with Turkmenistan felt in continued lower transit
volumes via Kazakhstan
• Reduced utilisation rates on
Central Asia-Centre and
Bukhara-Urals pipelines (~40%)
• Gazprom gas purchases from
Central Asia (2011):
• 11.2 bcm (Turkmenistan)
• 7.95 bcm (Uzbekistan)
Kazakhstan Gas Transportation Volumes (Bcm)
140
120
114.22
116.38
100
99.446
102.927
2009
2010
2011
80
60
40
20
0
2007
Source: KazTransGas
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91.089
2008
IGA Gas Transportation Revenue Breakdown* (2011)
Central Asian Gas Transit
29.298 (4.62%)
2.124
(0.33%)
363.584 (57.27%)
104.318 (16.43%)
Russian Gas Transit
Kazakhstan Gas
Transport (Internal
Market)
Kazakhstan Gas Exports
135.51 (21.35%)
Kyrgyz Gas Transit
Source: Intergas Central Asia; * figures in USD
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Domestic Supply Focus
• Economic growth = increasing internal demand for gas
• Domestic demand, gas exports constrained by lack of
infrastructure
• Gross output nearly twice commercial gas production
• Re-injected to support oil production
• What else to do with it??
Kazakhstan Real GDP Growth (% change)
12
10
• Government support for gas sector
8
• Law on Gas and Gas Supply (Jan. ‘12)
6
• Mandatory utilisation of associated gas
4
• Strategic investments in gasification
2
• KazTransGas as national
0
gas operator (July ‘12)
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2004 2005 2006 2007 2008 2009 2010 2011 2012*
Source: IHS Global Insight; * forecast
Laying the Ground for Future Exports
• Gasification projects galore to supply domestic consumers
• Expansion and/or modernisation of pipelines to supply Almaty, Almaty
province, city of Kyzylorda, South Kazakhstan province, Zhambyl province,
Mangystau province
• Two strategic gas pipeline projects of national importance
• Beyneu-Bozoi-Shymkent pipeline (1,475km; estimated USD3.6 billion)
• Goals: energy independence from Uzbekistan, tie-in to Central Asia-China pipeline
• Phase 1: Bozoi to Shymkent/Akbulak (1,164km; construction launched Sept. 2011,
due to be completed 2013)
• Stage 2: Beyneu to Bozoi (311km; due to start 2014, end 2015)
• Kazakhstan-China Main Gas Pipeline (1,304km; estimated USD7.3 billion)
• Goals: gas transit from Turkmenistan, Uzbekistan, future exports (5 bcm/y) from
Kazakhstan
• July 2011: construction launched on Line C (25 bcm/y)
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Turkmenistan’s Gas Export Options
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Turkmenistan’s Motivation For TAPI
• Turkmenistan has strong incentive to pursue TAPI pipeline construction
• TAPI as key economic driver
• Soviet-style economy relies heavily on gas export
revenues (estimated at over 50% of GDP)
• Long-term gas production and export targets
require additional export capacity
• 230 bcm/y of gas output, 180-200 bcm/y in exports (2030)
• TAPI as necessary for diversification
Turkmen Exports
Billion US dollars
20
80
15
70
10
60
5
50
2009
2010
2011 (e) 2012 (f)
Hydrocarbon Exports
Total Exports
Share of exports in GDP (right axis)
Source: IHS Global Insight
• Traditional dependence on Gazprom has highlighted Turkmenistan’s vulnerability
• Price disputes in 1997 and 2009 led to supply stoppages, dealt heavy blows to
Turkmenistan’s economy
• April 2009 explosion on CAC pipeline cut exports to virtually zero; January 2010 resumption
of supplies, but at a fraction of previous level (10-12 bcm/y rather than 40-45 bcm/y)
• Risk of new over-reliance on China?
• Central Asia-China pipeline shifting Turkmenistan’s dependence on Russia to China instead
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Turkmenistan-Afghanistan-Pakistan-India Pipeline
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State of Play in the Long-Running TAPI Project
• TAPI proposal continuing to move forward, despite security concerns
• Alignment of political goals and economic needs among four participating countries
TAPI At A Glance
• Significant progress post-2009
• Four-party framework agreement (2010)
• Uniform transit tariff agreed (2012)
• Formal gas supply and purchase agreement (2012)
• Pakistan: 38 mmcm/d
• India: 38 mmcm/d
Length
1,735km*
Throughput
Capacity
33 bcm/year
Estimated Cost
USD10-15 billion
*including 145km in Turkmenistan, 735km in Afghanistan,
800km in Pakistan, and 55km in India
• Turkmenistan-Afghanistan MoU on gas sector cooperation
• Next steps: now the REALLY difficult part starts
• Attempts to attract financing (international roadshows)
• Formation of consortium to design, build, and operate TAPI
• Desire, government political support insufficient to bring TAPI to reality
• Security risks can be mitigated, but TAPI needs a commercial champion
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Uzbekistan Caught in the Middle
• Geography and history leaves Uzbekistan few options for its gas
• Turkmen gas supplies supplanted Uzbek volumes in CAC flows in Soviet era
• Doubly landlocked = no sea access = no LNG export possibilities
• China, Russia, India, Iran: all markets with closer suppliers
• Vast majority of Uzbekistan’s gas production absorbed internally
• Government determined to monetise its gas reserve wealth
• Export focus as LUKoil-led projects boosting Uzbekistan’s gas output
• Start of Uzbek gas exports via Central Asia-China pipeline (April 2012)
• Billion-dollar investments to add value to gas production, find new outlets
• Gas-chemical projects with foreign investors: Surgil (Uzbek-South Korean
consortium), Mubarek (UzIndorama joint venture), Oltin Yo'l GTL (Sasol, Petronas,
Uzbekneftegaz)
• CNG retail fuel network expansion to supply vehicle market
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TCP: Dead, or Just Premature?
• Neither Azerbaijan nor Turkmenistan is ready to strike a deal that would
pave the way to construct Trans-Caspian gas pipeline (TCP)
• External political support/pressure notwithstanding
• Azerbaijan focusing on securing routes for its own gas exports
• Not ready to transit Turkmen gas when it hasn’t sorted a final plan to monetise its own
gas resources
• Turkmenistan lacks capacity to supply sufficient gas volumes to make
TCP economically worthwhile
• Gas from Block 1 insufficient to offset potential further loss of gas exports to Russia
• East-West gas pipeline across Turkmenistan still under construction
• Kazakhstan taking the “wait and see” approach
• Resolution of maritime border dispute could open the door for Kazakh gas supplies
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14
Key Questions
• Karachaganak dispute resolved, but what future for phase-3 gas?
• Russia, yes, but what about China?
• What about Tengiz, Kashagan gas eventually?
• Kazakhstan is better positioned to replace Uzbek and Turkmen gas volumes
sent via CAC to Russia
• Loss of Central Asia transit volumes offset by increased exports of
Kazakhstan’s own gas
• TCP prospects will get a boost with development of ‘southern corridor’
• Will Central Asian gas transit (to China) offset decline in
revenues from reduction in gas transit via CAC (to Russia)?
• Turkmen, Uzbek gas volumes transiting Kazakhstan in new direction
• Kazakhstan’s own gas production, exports will make the difference
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One Possible Outlook for 2025
2008
2011
2025*
Kaz participation in trans-Caspian
Gas
exportsofto
Russia deal (use info from Caspian Gas internal
--resolution
Az_Turkmen
presentation)
from
Turkmenistan
38
10
0
from Kazakhstan
14
15
20
from
Uzbekistan
10 as wait and 10
--need
infrastructure in place (Kaz
see, rather than10
leader)
TOTAL
62
35
30
--flow into Turkmen gas section
Gas exports to China
from Turkmenistan
from Kazakhstan
from Uzbekistan
TOTAL
0
0
0
0
Source: IHS CERA; * indicative projection. All figures in billion cubic meters (Bcm).
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15
0
0
15
45
10
10
65
Questions?
Andrew Neff
Senior Energy Analyst
IHS Energy
7/5, Bolshaya Dmitrovka Street
Bldg. 2, 5th Floor
125009 Moscow, Russia
[email protected]
www.ihs.com
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