Almasadam Satkaliyev hopes that Russian natural gas will have a “fair” price

Gazprom and the Russian government will set a fair gas price for Kazakhstan, Energy Minister Almasadam Satkaliyev said.

«I’d like to explain the situation a little bit. As you know, the export price of any product includes prime cost, transportation cost and yield that producers want to receive. We understand that Gazprom and the Russian government are the ones who set gas prices in Russia. We are sure [the cabinet of Kazakhstan] that the price setting is going to be fair; based on close relations with Kazakhstan and the Republic of Belarus. I mean we hope that the strategic partnership between our countries will be taken into account as well as all economic factors,» he said while responding to questions from journalists.

Earlier this week, Russian Gazprom denied that it is going to provide Kazakhstan with a bigger discount than it gives to Belarus.

«Information about lower gas price for Kazakhstan has circulated in the media, citing Almasadam Satkaliyev, minister of energy of Kazakhstan and the ministry’s press service. That information isn’t correct,» the gas company said in a statement.

On April 19, Kazakhstan’s energy minister revealed that the agency had already negotiated with Gazprom and QazaqGaz about the preliminary transport corridor for new gas pipelines from Russia.

«If the two governments approve these projects… this is going to be another source of natural gas for us. Although the projects are still on the negotiation table, we have already prepared some preliminary routes for that gas pipeline,» Satkaliyev said during a meeting with the cabinet’s members and President Kassym-Jomart Tokayev.

The official noted that the new pipeline is going to stretch from Russia to China across Kazakhstan. At the expense of Russian gas, Kazakhstan’s Ministry of Energy wants to supply gas throughout the Northern and Eastern regions of the country. The agency also noted that the Russian gas price is going to be relatively cheap.

«They are offering us a cheaper price than they offer to Belarus. Negotiations are still underway. Of course, Russia understands that the only possible way to negotiate effectively is compromise; they are ready to give us a much lower price compared to prices for Europe and Belarus,» Satkaliyev highlighted.

This might be easily explained by geography, because the main area for gas production in Russia is the Yamalo-Nenets Autonomous Okrug of northwest Siberia, Russia. And the distance between this region and Kazakhstan is shorter than to Belarus.

According to Arman Kasenov, deputy head of QazaqGaz, the new gas pipeline from Barnaul, Russia to China via the town of Semey, Kazakhstan is going to have a capacity of 40 billion cubic meters of gas per year in total. About 10 billion cubic meters of fuel might be used to supply the needs of customers in the Northern and Eastern parts of the country.

«We are talking about 30 billion cubic meters of gas for export plus 10 billion cubic meters of gas for Kazakhstan. We believe that the Northern and Eastern regions of Kazakhstan can consume about seven billion cubic meters of gas,» he said.

The planned gas pipeline may stretch through Barnaul, Rubtsovsk, Semey (with branch pipelines toward Pavlodar and Ust-Kamenogorsk), Alashankou and Korgas. Korgas is already the final point of Kazakhstan’s section of the Kazakhstan-China Pipeline. If the new pipeline from Russia is built, Kazakhstan will be able to close the system in one ring for different types of operations with gas.

As Kasenov noted, Kazakhstan is continuing negotiations with Gazprom. He has also underlined that in this case, the final price of gas will be different from the gas price in the Western part of the country. QazaqGaz already prepared technical and economic estimates for the project and gave them over to Gazprom. Moreover, Kazakhstan is eager to get a stake in this potential gas pipeline from Russia to China.