Passions around gas

Each of them lobbies their own interests, which not always coincides with the interests of their partners. "Gasprom" claims its strategic interest in Karachaganak louder and louder.

Alexei Chernyshev, head of Orenburg province administration, who paid a visit to our gas field during the Year of Russia in Kazakhstan also talked about it.

The Orenburg gas refinery is ready to receive up to 10 billion cubic metres of Karachaganak gas. Last year the Orenburg refinery underwent a costly reconstruction and as a result its capacities increased up to 7 billion cubic metres, moreover, it was done exclusively with the Karachaganak gas in view.

Today "Orenburggasprom" is ready to increase its capacities up to 10 billion cubic metres of gas. Costs for additional reconstruction will not be significant, "Gasprom" says.

The extension and modernisation of the Orenburg gas refinery for the processing of approximately eight billion cubic metres is estimated by specialists in USD 300-320 million and it is planned to do it as soon as possible, approximately in 1.5-2 years.

In an interview to Russian journalists Alexander Ryazanov, "Gasprom" OJSC deputy CEO, stressed that to process additional quantities of gas, which could be delivered to Orenburg from Karachaganak gas condensate field in Kazakhstan at least 3 technological installations are needed, two gas pipelines to Karachaganak and a set of industrial equipment. To resolve this issue "Gasprom" suggests to create a joint Kazakhstani-Russian venture on the basis of the Orenburg refinery. The same proposition was expressed by the head of Orenburg administration observing that the participation of Kazakhstani capital in that project woul be mutually beneficial.

The Gasprom representative A. Ryazanov clearly stated that "the offer implies a full utilisation of the existing gas refinery complexes in Orenburg, which have a capacity up to 40 billion cubic metres of gas."

But these plans of Russian gas people contradict plans of the Kazakhstani government.

RK wants to follow its own way. During the last few years there are preparations for the realisation of the so called gas project underway. It suggests construction of a gas refinery with a capacity up to ten billion cubic metres of gas directly on Karachaganak field. "Gasprom" is worried about this plan, again from the position of the raw material supplies reduction. The gas project is very expensive in comparison with the simple modernisation of the Orenburg gas refinery, nobody argues with that, it is quite costly indeed. In average it is estimated in USD 1.2 billion. But this is not the point. Investors are found, in the case that the Kazakhstani government gets clear about the market.

"Gasprom" explains its sceptical attitude to the implementation of the gas project by the fact that, according to Ryazanov, the refinery construction on Karachaganak can be profitable only in the case that "not less than 90% of gas are sold on the Western market, which does not experience any big lack of gas today and it would be quite difficult to distribute ten billion cubic metres of gas there."

However the Kazakhstani side sticks to its own position. According to Stanislav Kachalo, West Kazkahstan province governor, all "that is related with the gas project must be related with the Republic of Kazakhstan and West Kazakhstan province."

And a proposition to pump all Karachaganak gas to the Orenburg refinery is completely unprofitable for Kazakhstan. Therefore we remain on our position on the realisation of the gas project and we have allies in the persons of the president and government of RK," - Kachalo stressed.

But in any case we can't do without Russia when this global project is resolved. The transportation of gas to the external market will anyway be realised through the territory of Russia. And in Kazakhstan there are concerns about whether the neighbour will permit or no the Kazakhstani gas through its territory. According to some sources Kazakhstan is ready to increase capacities of the gas transportation system for its own or borrowed money under long term contracts, which are going to be concluded.

In its turn "Gasprom" OJSC aspires to become a shareholder of the gas transportation system of Kazakhstan if it is sold. "Gasprom" is ready to make such step as a creation of a JV to extend and modernise the gas transportation system of Kazakhstan and to participate there by its assets, money and, of course, load its own operating system. But those are wishes that aren't supported by anything, which will probably find their mutually beneficial solution.

The gas project itself underwent an expertise and today its approval by other permitting structures is being concluded.

According to the deputy governor of West Kazakhstan province Kachalo, the next phase will be execution of design estimates. Therefore the gas project will not be born so soon. The project may begin not earlier than the second half of 2007. As for all kinds of games around this project, according to WKP authorities, "we have certain trump cards."

True our officials refused to name them. Moreover the solution of all problems is currently on "50 X 50" stage.

And at the same time when it comes to strategic interests, each lobbies his own interests especially in the oil & gas area.