ANALYSIS - Kazakhstan wants to be major player in gas market

/REUTERS, Almaty, Dmitry Zdannikov, Feb 19, 02/ - Kazakhstan able nearest decades to become on of the leading oil producers in the world wants now already to play a key role in Central Asia gas transit and gradually become full player in gas market. Kazakhstan continues investing money into modernization of its own gas transportation system that allows to transport gas from neighboring Turkmenistan to Russia and CIS countries and intends to gradually expand its own exploitation. "As for now all projects in the region ling their future with gas pipeline Central Asia - Center that passes through our territory," said in his interview to Reuter the first deputy director of KazTrasnGas Company, Daniyar Berlibaev. "We are also observing gas markets liberalization of EC. We are interested to sell gas to Europe, receive an access to final consumer. I think, we are gradually moving toward that issue," he said. KazTransGas is a monopoly in gas transportation through main gas pipelines of Kazakhstan and is a member of state concern Oil and gas transport. Country thinks that Turkmen gas transit to Russia will be always growing. In Russia gas production has been steadily falling during last years, for its increase Gasprom has to invest funds into new and very expensive projects in Yamal and Barents Sea, while in Turkmenistan there are already serious volumes of production and it has third on size world gas reserves. Turkmenistan revenues are highly dependent on gas export, however so far all plans relative to alternative gas pipelines passing over Russia haven't succeeded. It concerns a project of Trans Caspian gas pipeline that assumed to be built to Turkey through Caspian Sea bottom and via territories of Georgia and Azerbaijan and a project of gas pipeline via territory of Afghanistan and Pakistan. Trans Caspian gas pipeline almost finished its existence after that Azerbaijan found out own gas reserves in Shakh-Deniz filed and agreed upon its export to Turkey. Concerning Afghan project, all investors will agree to invest into it providing that Afghanistan will be stable and Pakistan - solvent. Turkmenistan has no any choice than to sell gas to Russia: this year Turkmenistan obliged to supply 40 billion cubic meters of gas through Central Asia - Center gas pipeline to Ukraine via Russia and about 10 billion to Russia. However the main problem with these contracts is that they are signed annually whereas Gasprom is willing to sign long-term contract with Turkmenistan that would allow the company plan its production in future. Despite that Presidents of Russia and Turkmenistan Vladimir Putin and Saparmurad Niyazov couldn't agree in January of current year upon gas prices, Kazakhstan is sure that long-term contract will be signed anyway. KazTransGas intends to invest up to $500 million into modernization of Central Asia - Center till 2005 having invested already into repair works about $170 million in the year 2001 and having planned investments in the amount of $90 million for current year. "We can achieve a gas pipeline capacity of 80 billion cubic meters by the year 2005," said Berlibaev. As for now, capacity of gas pipeline that have been built in soviet times accounts for about 50 billion cubic meters of gas per year. PROSPECTS OF OWN EXPORT However, future of the long-term contract also depends on Gasprom that having refused to be a monopoly of gas export to Europe will be able to allow other independent producers enter gas export sector. Based on information source in Gasprom, the company gradually understands a necessity of this step and even discussed this issue with Turkmenistan representatives. Berlibaev says that Gasprom and KazTransGas have already agreed to create a joint venture that will perform activity in gas marketing in external markets. Besides, Gasprom recently started allowing Kazakhstan sell insignificant volumes of gas in CIS countries markets. Western oil companies that exploit in Kazakhstan giant fields - Tengiz and Karachaganak - and also Caspian Shelf watch closely gas market situation development in Central Asia. "The main task of Karachaganak for this moment - is liquid hydrocarbons. However, in 10 years gas production will rise sharply. So, we should start now think about our potential gas supply markets," said Reuter a source in one of companies working in Karachaganak. According to Berlibaev, gas extraction in Kazakhstan should rise up to 50 billion cubic meters per year, and export - up to 35 billion by the year 2015 from 14 and 3 billion today, respectively. He says that a growth will take place mainly due to Kaarchaganak and Tengiz and also due to extraction in giant filed Kashagan in Caspian shelf, reserves of which are kept in secret. Berlibaev added that last events in oil industry show that Russia can make concessions. So, Kazakhstan increased in the year 2001 oil export to Europe through Russia up to 15 million tons from only 5 million tons, which it exported several years ago.