More Kazakh Natural Gas Going to China

BEIJING (XFN-ASIA) - China National Petroleum Corp (CNPC), parent of listed Petrochina Co Ltd (SHA 601857; HK 0857), said it has signed a framework agreement with Kazakhstan's national oil and gas company KazMunaiGaz to expand cooperation in natural gas.

KazMunaiGaz has agreed to ensure the transport of natural gas produced by CNPC from the Aktobe field via phase II of the Kazakhstan-China Gas Pipeline, in addition to supplying five bln cubic meters of natural gas to the pipeline as contracted earlier.

Meanwhile, the two sides will jointly develop the Urikhtau gas condensate field and export 5-10 bln cubic meters of natural gas to China. The exports are subject to the fulfilment of gas demand in southern Kazakhstan, according to a statement published on CNPC's website.

The Beineu-Bozoy-Kyzylorda-Shymkent section of the Kazakhstan-China Gas Pipeline will be constructed and operated jointly by the two companies. The pipeline has natural gas transport capacity of 10 bln cubic meters per year.

In addition, the two companies also agreed to expand phase I of the Kazakhstan-China Gas Pipeline subject to an assessment of incremental natural gas resources.

In a separate statement, the CNPC said it signed an in-principle agreement with Russia's Transneft to build and operate a crude pipeline.

With the establishment of phase I of Russia's Far East pipeline, the two companies will jointly build and operate the Sino-Russia Crude Pipeline which runs from the Siberian city of Skovorodino to Daqing in China, via China's border city of Mohe.

The pipeline is about 70 kilometers long in Russia and 960 kilometers in China.

Rosneft and CNPC will sign a new long-term oil purchase and sale contract after the completion of the pipeline.

China and Russia will formally sign a contract within the year detailing the timetable for pipeline construction. The agreement also provides for long term cooperation in the trading of crude and the integration of upstream and downstream businesses, CNPC said.

The two sides will also further promote joint exploration and development in Russia, as well as the establishment of a joint venture refinery in China, it added, without providing details.