Should Kazakhstan reduce its natural gas supply to China? The reason is found!

Kazakhstan's natural gas supply to China will be reduced by 20% - 25% from February to March 2020 at the request of China, Kazakhstan's minister of energy norgayev said in a question from reporters in the lower house of the parliament on the same day, according to Kazakhstan news agency reported on March 11. Even so, the annual gas supply to China will remain basically the same as the previous year. 

Nogayev stressed that the current main task is to ensure the full load operation of production enterprises. In the middle of January, the oil field of Aktobin oil and gas company suffered from the accident of exceeding the standard of organic chlorine content, which has not been completely solved and has certain impact on the production of the enterprise.

Kazakhstan exported about 5.1 million tons (6.9 billion cubic meters) of natural gas to China in 2019, according to a Bloomberg report released on March 11. China National Petroleum Corporation, China's largest natural gas importer, last week proposed force majeure on natural gas imports, including liquefied natural gas and pipeline natural gas. Its parent, CNPC, had earlier negotiated with suppliers to reschedule deliveries.

Bloomberg reported that it is understood that about 70% of the natural gas imported by CNPC comes from pipeline natural gas in Russia, Myanmar and Central Asia, and 30% from liquefied natural gas supply in Australia, Qatar and other countries. Kaz transgas, Kazakhstan's national natural gas carrier responsible for gas exports, said it had received a notice of force majeure on March 5. Uzbekistan's energy ministry said last week that it was continuing to supply gas to China despite being notified of the force majeure. Turkmenistan officials did not comment.

China novel coronavirus pneumonia has estimated that the loss of natural gas demand in China is about 8 billion cubic meters, according to Citigroup analysts. According to Bloomberg's calculation based on data from the national development and Reform Commission, it is 2.6% of the 307 billion cubic meters demand last year, close to one third of the average monthly demand.

In addition, according to the Interfax news agency, the Russian "Siberian power" pipeline, which was officially put into use in December last year, will be maintained in late March, when the gas supply to China will be suspended.

Kazakhstan is rich in natural gas resources. According to a report released by Interfax news agency on December 19, 2019, Kazakhstan's Deputy Minister of energy, Makawav, said at a press conference that day that Kazakhstan plans to exploit 57 billion cubic meters of natural gas in 2020, a slight increase of 1.2% over the previous year. 

According to the data released by the Ministry of energy of Kazakhstan on November 11, 2019, from January to October, 2019, Kazakhstan's natural gas output was 46.3 billion cubic meters, an increase of 1.5% year on year; and the commercial natural gas output was 27.12 billion cubic meters, a decrease of 1.4% year on year. Among them, domestic sales of natural gas reached 11.8 billion cubic meters, a year-on-year increase of 3%; export of natural gas reached 15.3 billion cubic meters, a year-on-year decrease of 8.9%. 

According to preliminary statistics, Kazakhstan's natural gas production is expected to reach 56.3 billion cubic meters in 2019, including 32.8 billion cubic meters of commercial natural gas. Kazakhstan's domestic natural gas consumption keeps an annual growth of 4% - 5%, and in 2019 it will be 15.8 billion cubic meters.