LNG

The Central Asian republic of Kazakhstan with some of the world’s largest oil and gas fields on its territory and part of an infrastructure network with Russia to supply natural gas to China in competition to LNG, is boosting its own domestic gas output as well as its role as a gas transit nation.

Gazprom, the Russian natural gas company impacted by sanctions after the invasion of Ukraine in 2022, is trying to rebuild its business by signing deals for gas transportation exits via the three Central Asian former Soviet states of Kazakhstan, Uzbekistan and Kyrgyzstan as well as its neighbour across the Black Sea, Turkey.

Gazprom has just signed contracts with Kazakhstan for gas transit to Uzbekistan and Kyrgyzstan.

The documents were signed at the St. Petersburg International Economic Forum held by the Russians.

Gazprom has ambitious plans to ramp up gas supplies to Central Asia and Turkey.

The company aims to deliver significantly larger volumes via the Central Asia-China Pipeline for 15 years starting in 2025. 

The Central Asia-China pipeline is a network of natural gas pipelines that transport natural gas from Turkmenistan, Kazakhstan, and Uzbekistan into China.

With a 55 billion cubic metres capacity, the same as the now defunct Nord Stream 1 pipeline from Russia to Germany, the 1,833-kilometres (1,140 miles) Central Asia-China Pipeline presently comprises three sections (Lines A, B, and C), running from Turkmenistan through Uzbekistan and Kazakhstan to China’s Uygur Xinjiang Autonomous Region.

From there, the pipeline links up with the West-to-East Gas Pipeline in China, underscoring its significance in regional energy dynamics.

Gazprom added that it had also signed a contract for the supply of gas to the north and south of Kyrgyzstan.

Larger volumes

In addition, Gazprom and Kazakhstan signed an action plan to prepare gas facilities in Central Asia to increase the transportation of Russian gas to Uzbekistan.

In June 2023, Uzbekistan concluded a two-year gas purchase agreement with Gazprom.

The daily supply volume is 9 million cubic metres and the annual volume is almost 2.8 billion cubic metres and deliveries started in October 2023.

From November 2025, Gazprom said it planned to begin supplying “significantly larger volumes” covered by 15-year contracts with Kyrgyzstan, Kazakhstan and Uzbekistan.

In February 2024, it was reported that the government of Uzbekistan intends to upgrade the republic’s main gas system in order to increase gas imports from the Russian Federation by 3.5 times from 9 million cubic metres per day to 32 mcm per day.

BOTAŞ venture

Turkish Energy Minister Alparslan Bayraktar was also at the Russian Forum and said the Turkish Petroleum Pipeline Corporation (BOTAŞ) planned to set up a joint venture company with Gazprom as part of a plan to establish a hub in Turkey for selling natural gas.

“Significant work has been done in recent years to establish a natural gas trading centre in Turkey,” said Bayraktar.

“We are now planning to establish an operating company in partnership with BOTAŞ and Gazprom in Istanbul,” he added.

“In the coming months, we would like to carry out concrete work and realise the gas hub project,” stated Bayraktar.

Energy ministers of the 27-nation European Union failed to reach an agreement at a council meeting in Brussels on imposing a maximum price for natural gas that would have impacted markets including, LNG cargo pricing and pipeline supplies from Norway.

A leak of natural gas from the blocked Russian Nord Stream II link to Germany that was never brought on line but was fully primed to start up has led Denmark to advise Baltic Sea shipping not to come within 5 kilometres of the pipeline.

Gazprom said pipeline natural gas exports to countries outside the former states of the Soviet Union dropped by more than 30 percent, while the company’s shares also plunged on not paying a dividend along with those of German utility Uniper on its lack of guaranteed Russian gas supplies.

Russian natural gas company Gazprom confirmed it had cut off pipeline natural gas to Germany purchased by Denmark's Orsted and Shell subsidiary Shell Energy as output by the Saint Petersburg-based company declined almost 5 percent and deliveries to Europe dropped by a quarter in the first five months through May 2022.

Gazprom said gas production fell by 4.8 percent year-on-year to 211.4 billion cubic metres compared with the same January-to-May period of 2021.

Gas exports to non-Commonwealth of Independent States (CIS) countries, meaning to Western Europe, dropped by 27.6 percent, or by 23.2Bln cubic metres, in the January-to-May 2022 period and amounted to 61 Bcm.

“Gazprom confirms complete suspension of gas supplies to Denmark’s Orsted Salg & Service A/S and Shell Energy Europe due to failure to pay in roubles,” it said.

“As of the end of the working Gazprom Export did not yet receive a payment from Orsted Salg & Service for the gas supplied in April, which was to be made in compliance with the Russian President's Decree No. 172 dated March 31, 2022,” it added.

“No payment has been received from Shell Energy Europe for gas delivered in April either,” it added.

Export data

In its gas production and export data, Gazprom said the average daily exports of Gazprom in May fell by 9 percent in monthly terms to 351.6 million cubic metres for  deliveries of gas with confirmed nominations.

Gazprom added that gas deliveries to China via the “Power of Siberia” pipeline were increasing, but it did not provide any figures.

Since Russian President Vladimir Putin sent troops into Ukraine on February 24, Moscow has demanded that clients from “unfriendly countries”, including the 27 EU member states, pay for their gas in roubles.

The new requirement is aimed at stopping Western financial sanctions against Russia’s central bank further weakening the rouble.

So far Poland, Bulgaria, Finland and the Netherlands have had their natural gas deliveries suspended over refusing to pay in roubles.

Dutch natural gas trader GasTerra was the most recent not to comply with Gazprom’s payment requirements in roubles and consequently was cut off by the Russian company.

GasTerra, which buys and trades gas on behalf of the Dutch Government, said it had contracted elsewhere for the 2 Bcm it had expected to receive from Gazprom through October 2022.

GasTerra is 50 percent-owned by Dutch Government entities while another joint 50 percent stake is shared between Shell and ExxonMobil.

Most of Gazprom’s European Union pipeline natural gas customers are set to open new bank accounts with Gazprombank to meet Russian demands for the payment of volumes to be made in Russian roubles.

Two Balkan natural gas and utility companies, Albania's Albgaz and Bulgaria's Overgas, have signed an accord to cooperate on projects to diversify supplies in the region at an event attended by former US Secretary of State Mike Pompeo.

Pompeo attended as the Chairman of US company Linden Energy’s Advisory Board. Linden has agreed to take a 50 percent stake in Overgas subject to regulatory approval.

The accord outlined the parameters of the planned Albanian-Bulgarian cooperation to secure natural gas from non-Russian sources via commercially viable projects driven by the private sector.

“We are excited to begin working with a fellow regional gas company such as Albgaz. The signing of this agreement is a first step in regional cooperation to diversify gas supply to the Balkans,” said Svetoslav Ivanov, Executive Director of Overgas.

The agreement was signed in the Albanian capital Tirana and representatives of each company attended along with Albanian Prime Minister Edi Rama.

Linden Energy was represented by Stephen Payne, the company's President and company founder and by former Secretary of State Pompeo.

The US company in July 2021 signed an agreement to acquire 50 percent of Overgas, the independent Bulgarian gas trading company and Bulgaria’s largest privately-owned gas firm.

Linden Energy is focusing on energy project development and was founded in 2013 by Payne.

LNG record

“Payne has a history in the international energy sector as he has negotiated over 27 million tonnes per annum of LNG sales, was instrumental in the development of several large LNG export projects in the US and several major international pipelines,” said the statement on the signing event.

It noted that Linden has other projects under consideration in Eastern Europe and South Asia.

Linden Energy is additionally a 10 percent capacity holder in the Gas Interconnector Greece-Bulgaria (IGB) pipeline.

“As one of the only US companies involved in the Balkans gas trade, Linden Energy is excited to take this first step as part of Overgas in partnership with Albgaz,” stated Payne.

Secretary Pompeo said that at a time of great uncertainty in the European energy market he was proud to be a part of a team that is addressing this issue head-on.

“The Balkan region is one of the most vulnerable in terms of the lack of energy diversity and the signing of this accord is a strong step in the right direction,” Pompeo declared.

Enagás, the Spanish gas grid and LNG terminals operator as well as a shareholder in the Trans-Adriatic Pipeline (TAP), said the US was its main liquefied natural gas supplier in the first quarter followed by Algeria and Nigeria as LNG deliveries increased substantially and European Union gas supplies became tight.

Algeria and Italy said they had signed an agreement for the North African nation to supply more natural gas to European Union member Italy to replace falling supplies from Russia.