Saturday, 25 May 2019 07:11 GMT

Kazakhstan intends to become gas exporter

(MENAFN - AzerNews) By Abdul Kerimkhanov

For the first time, trading in liquefied petroleum gas was held at the ETS Commodity Exchange site in Kazakhstan on February 5, 2019.

According to the ETS press service, during preparation for the launch of trading in liquefied petroleum gas, about 500 employees were trained for three months - representatives of 13 manufacturing plants, as well as 76 gas grid organizations - wholesale buyers in the CIS.

According to the recommendations of the ETS Commodity Exchange management committee, the commodity exchange adopted 39 exchange instruments across the CIS on 12 delivery bases from 14 regions and two cities of republican significance.

At the first auction, bids from sellers were submitted on 10 delivery bases. At the same time, in the interests of the buyers, 19 applications were submitted for the purchase of the CIS.

According to the trading results in the framework of the trading session, the first exchange deal on liquefied gas was recorded on the basis of KazGPZ LLP on EXW terms in Mangistau region.

Within the framework of the first transaction, propane-butane technical was realized with a total volume of 70 tons at a price of 43,345 tenges ($115), including VAT per metric ton.

At the first stage, it is proposed to sell 10-20 percent of liquefied gas supplied to the domestic market as part of the supply plan, followed by a phased increase in share through electronic trading platforms.

Today, about 72 percent of the gas produced by Kazakhstan is supplied to the domestic market. If this trend continues, the shortage of liquefied gas could begin in 2019.

It is planned that by 2021, the state regulation of wholesale prices will remain only for liquefied gas sold to the population through group tank installations, as well as for petrochemical enterprises producing high value-added products.

Liquefied gas is in demand for those regions that are not covered by the gas pipeline system, which is half the country today. The demand for it is growing, especially for use in transport.

There is an imbalance of prices: the internal cost is much lower than the export. This makes deliveries to domestic consumers unprofitable for producers.

IFC Markets analyst Dmitry Lukashov noted that exchange trading in liquefied petroleum gas is carried out as part of the program of gradual abolition of state regulation of prices.

The transition to market pricing is planned for 2020, but the exact dates will still be specified.

Earlier, the government limited the maximum wholesale price of gas in accordance with the Law on Gas and Gas Supply, the analyst stressed. This not only caused producers to lose money, but also increased the risk of gas shortages in the domestic market due to illegal exports.

He considers that new changes in legislation should completely solve these problems.

'Production of liquefied petroleum gas in Kazakhstan is approximately 2.6-2.7 million tons per year. Domestically, about 36 percent of this volume is consumed, and the rest is exported. I believe that at the initial stage, the rejection of state regulation will not have a significant impact on these shares' distribution, Lukashov stressed.

As he noted, subsequently, market pricing in the domestic gas market may attract foreign investors who are able to build additional liquefaction capacity.

IFC Markets analyst added that in this case, there is a hope for a substantial increase in exports.


Abdul Kerimkhanov is AzerNews' staff journalist, follow him on Twitter: @AbdulKerim94

Follow us on Twitter @AzerNewsAz

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    Kazakhstan intends to become gas exporter

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