Economy

China, Kazakhstan sign new gas pipeline deal

By Wan Zhihong (China Daily)
Updated: 2010-06-14 07:23

A worker checks the existing China-Central Asia gas pipeline. Agreement has now been reached between China and Kazakhstan to build a 1,400 kilometer natural gas pipeline between the two countries. [China Daily]

BEIJING - China and Kazakhstan have signed a deal to build and finance a natural gas pipeline and deepen their cooperation on nuclear energy, extending the two countries' ties on resources.

Under the agreement signed on Saturday during a visit by Chinese President Hu Jintao, the two countries will build a 1,400-km gas pipeline. It will link with an existing gas pipeline running between China and Central Asia.

The project will help meet gas demand in southern Kazakhstan. Feasibility studies will also be undertaken, looking at increasing gas exports to China from the Caspian Sea area and other Central Asian countries through the pipeline, China National Petroleum Corp (CNPC) said on Sunday.

Analysts said the deal underlines the importance of energy cooperation between China and central Asian countries, which are rich in natural resources. "These countries will play an increasingly important role in China's overseas energy strategy," said Xia Yishan, an expert at the China Institute of International Studies.

China signed a deal with Uzbekistan last Wednesday to buy 10 billion cubic meters of natural gas per year from the country. Both countries also signed a memorandum of understanding to expand their cooperation on gas.

Starting operation in December 2009, the China-Central Asia gas pipeline was China's first large pipeline project to import natural gas. It starts at the Turkmenistan-Uzbekistan border and runs through central Uzbekistan and southern Kazakhstan to China's Xinjiang Uygur autonomous region.

At Horgos in Xinjiang, the pipeline is connected with China's second West-East gas pipeline, which extends 8,653 km across 14 provinces, municipalities and regions, including Shanghai and Hong Kong.

Analysts said that China is expected to see more gas imports in the future. Natural gas consumption will account for 10 percent of China's annual total primary energy consumption by 2020 from the current 3.9 percent level, according to Zhou Jiping, vice-president of CNPC.

Uranium supply

Kazakhstan, which last year surpassed Canada to become the world's largest uranium miner, will also increase shipments to China after its state nuclear company agreed a supply contract on Saturday during the presidential visit.

Kazatomprom will supply uranium to China Guangdong Nuclear Power Corporation (CGNPC), details of which were not disclosed.

CGNPC - which operates more than 40 percent of China's nuclear power generating capacity - said in April 2009 it would develop a uranium deposit in Kazakhstan with reserves of 40,000 tons in a joint operation with Kazatomprom.

A third agreement signed on Saturday will allow for cooperation between Kazakhstan and China on the peaceful development of nuclear energy.

China plans to increase its nuclear power capacity to 70 gigawatts (gW) to 80 gW in 2020. The country has 11 nuclear power reactors under operation now. These reactors have a total capacity of 9.1 gW, accounting for around 1 percent of the country's total power capacity.