Oil & Gas

07 Jan 2022

Chinese Firms' Energy Projects in Kazakhstan Remain Safe: Sources

07 Jan 2022  by   

The protests in Kazakhstan have sparked concerns on oil and gas deliveries to China. However, Chinese enterprises and industry insiders said that the unrest will not have a big impact as the transportation of oil and gas are technically reliable. Local Chinese companies said that they are prepared, and the Kazakh government will also take corresponding measures to ensure the safety.

The China-Central Asia Gas Pipeline in Turkmenistan File photo: VCG

The energy projects and normal operations of Chinese companies in Kazakhstan have so far been spared, but companies said they will be cautious and closely follow the situation after the country declared a two-week state of emergency on Wednesday.

The Kazakh Representative Office of Power Construction Corporation of China (PowerChina) said that it received on Wednesday a security risk alert from the Chinese Embassy in Kazakhstan.

"All of our 124 Chinese employees in Kazakhstan are safe. Security has been strengthened in accordance with the requirements and reminders of the embassy. In Almaty, employees are prohibited from going out and were asked to work from home. We have increased goods supplies and security measures," PowerChina told the Global Times on Thursday.

"Our road project in Kazakhstan is under closed management but the construction is under normal way," a staffer at the Shanghai Construction Group told the Global Times on Thursday.

The construction site is about 500 kilometers from several major cities in Kazakhstan. Security is guaranteed and food reserves are prepared in advance at the site, the staffer said.

Another Chinese energy company also said on Thursday that as its oil exploration projects are located far from big cities, they have not been affected for the time being, and local businesses are operating normally.

"We're not thinking about pulling out of Kazakhstan, because it's a very big part of our market. The vast majority of our employees are local," the company told the Global Times on the condition of anonymity.

According to China's Ministry of Commerce, Kazakhstan's gas and oil fields are mainly located in the western region, while the main users are concentrated in the northern, central and southern regions.

Industry insiders said that although Kazakhstan is a transit country for the China-Central Asia Gas Pipeline, the delivery of natural gas should be guaranteed as those pipelines were built in remote areas far from Kazakh cities where protests occurred.

The China-Central Asia Gas Pipeline, which began operating in 2009, starts from Turkmenistan and Uzbekistan, running through central Uzbekistan and southern Kazakhstan, and ends in Khorgas in Northwest China's Xinjiang Uygur Autonomous Region.

By March 2020, the China-Central Asia natural gas pipeline delivered 304.6 billion cubic meters of natural gas to China, the Xinhua News Agency reported.

The situation in Kazakhstan will inevitably have some impact on the delivery of oil and gas, but the overall operation will continue to remain normal, Yang Jin, an associate research fellow at the Institute of Russian, Eastern European and Central Asian Studies at the Chinese Academy of Social Sciences, told the Global Times on Thursday.

"The China-Central Asia Gas Pipeline involves the core interests of Kazakhstan and is one of its economic lifeblood. Even if there is temporary domestic unrest, it will not affect deliveries," said Yang.

China has strived to diversify its import sources of natural gas. Line D of the China-Central Asia Gas Pipeline, which is still under construction, will not pass through Kazakhstan as the other three pipelines did and will enter China via Wuqia county in Xinjiang.

Line D starts in Turkmenistan and runs through Uzbekistan, Tajikistan and Kyrgyzstan, and is designed to carry 30 billion cubic meters of natural gas annually.

China has imported 4.02 million tons of natural gas from Kazakhstan from January to November in 2021, according to statistics from Chinese Customs. Natural gas imports from Russia totaled 10.82 million tons, and 21.92 million tons from Turkmenistan.

Although energy and infrastructure projects are located far away from cities in Kazakhstan, the Chinese Embassy in Kazakhstan on Wednesday asked Chinese enterprises to pay close attention to the development of the situation, raise safety awareness, make up emergency plans, and travel with caution.

The Beijing Palace Soluxe Hotel Astana in Nur-Sultan, capital city of Kazakhstan, said its operations have been affected.

"Since Wednesday afternoon, the internet network has been completely interrupted, and new guests cannot check in. Only the building and office area of the hotel are operating normally," a hotel employee surnamed Zhou told the Global Times on Thursday.

Zhou said that the overall security has not been affected, and he hasn't heard of any security problems from other Chinese companies or businesspeople.

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