By Masha Gordeyeva
BAISERKE, Kazakhstan (Reuters) - China moved a step closer to securing a new source of gas supply on Friday when Kazakhstan finished building its segment of a pan-Central Asian gas pipeline designed to address China's growing energy needs.
The pipeline is the first significant gas link connecting the former Soviet region with eastern markets while bypassing Russia. Russian gas monopoly Gazprom is currently the main buyer of Central Asian gas.
"The first gas will be shipped in late November 2009," said Beimbet Shayakhmetov, the head of Asian Gas Pipeline company, a joint venture set up by China and Kazakhstan to build the link.
"In 2010, we will transit about 4.5-5.0 billion cubic metres of gas from Turkmenistan," he told reporters as workers were welding the last pipe links at the construction site on the steppe near the country's commercial hub of Almaty.
The Kazakh segment is part of a route that links Turkmenistan's natural gas deposits with China via Uzbekistan and Kazakhstan. Other parts of the pipeline are yet to be completed.
Wang Dongjin, vice-president of Chinese state energy firm CNPC, said his company would fill the pipeline with gas from Amu Darya Right Bank area in Turkmenistan, where it operates under a production sharing agreement.
"At the moment ... another field, South Iolotan, is being developed," he told Reuters. "We will also ship gas from that field."
LOANS FOR ENERGY
Turkmenistan, Central Asia's largest gas producer, halted exports to Russia after a pipeline explosion which it blamed on a sudden cut in Gazprom gas intake. The two sides are in talks on new terms of supplies.
At the same time, China has made an aggressive push into the Turkmen energy sector by giving Turkmenistan a $3 billion (1.84 billion pound) loan to develop the South Iolotan field.
South Iolotan contains between 4 trillion and 14 trillion cubic metres of gas, Britain's Gaffney, Cline and Associates said last year, making it one of the world's five largest deposits.
Asian Gas Pipeline's Shayakhmetov said China and Uzbekistan, the second-largest producer in the region, were also in talks on supplying the pipeline.
By 2013, the 6,500 km (4,000 mile) pipeline is due to ship 30 billion cubic metres (bcm) of gas to China annually. In addition, Kazakhstan plans to receive 10 bcm through the pipeline for its own needs.
China has not disclosed the total cost of the project. Shayakhmetov said the Kazakh segment cost $4 billion to build.
His company will spend $3.5 billion more to extend the pipeline to Kazakhstan's own gas fields, located close to the Caspian Sea coast.
Kazakhstan, which produces more oil than gas, ships some of its oil to China through a pipeline built in 2006 and operates several upstream joint ventures with Chinese firms.
Beijing further strengthened its foothold in the former Soviet republic in April after it agreed to lend Kazakhstan $10 billion in a "loan-for-oil" deal during Kazakh President Nursultan Nazarbayev's visit.
As part of the deal, CNPC bought a stake in MangistauMunaigas, a medium-sized local oil producer.
(Writing by Olzhas Auyezov; editing by Philippa Fletcher)
