Kazakhstan is looking for gas for cars in Russia – Kommersant

In 2023, Kazakhstan will continue to reduce the export of liquefied hydrocarbon gas (LHG) against the backdrop of growing domestic consumption and a shortage of motor gasoline. According to Argus analysts, Kazakhstan may even have to switch to importing LPG from Russia. This, according to experts, may have a positive impact on commodity prices within the Russian Federation, which sank heavily due to sanctions last year.

Kazakhstan in 2023 can not only reduce the export of liquefied natural gas (LPG), but also start importing it from Russia. Such a forecast with reference to market participants is contained in the Argus Caspian Transport report. The start of imports will help prevent shortages amid growing demand for motor fuel from large industrial consumers. More than 60% of LPG consumption in Kazakhstan is accounted for by vehicles.

At the same time, in 2023, according to the expectations of the Ministry of Energy of the country, the volume of LPG production in Kazakhstan will not change compared to 2022 and will amount to 2.86 million tons. The Ministry regulates the supply of liquefied gas to the domestic market on the basis of a monthly schedule and recommends that producers sell LPG on the domestic market. Demand is growing there, as against the backdrop of the launch of new petrochemical projects, LPG is increasingly being used as a vehicle fuel due to a shortage of gasoline.

According to traders, Kazakh companies are already placing requests for railroad deliveries of liquefied gas from Russia. In 2022, Russia was the monopoly supplier of this product to Kazakhstan by rail, the volume amounted to 1.3 thousand tons compared to 0.4 thousand tons a year earlier.

Last year, against the backdrop of a reduction in production and growth in LPG consumption, Kazakhstan already reduced exports by 33.2% compared to 2021, to 1.1 million tons. Tengizchevronoil, the country’s largest LPG producer, reduced export shipments most significantly (by a third, to 921,000 tons) last year, Argus explains. The main reduction was in the Ukrainian market (75 thousand tons). Direct shipments of Kazakh LPG to this country were stopped on February 24, now gas is supplied via alternative routes. In addition, the export of LPG from Kazakhstan through the ports of the Black and Azov Seas decreased by 18.2%, to 497.4 thousand tons, due to complications in navigation. After the explosion of one of the spans of the Crimean bridge in 2022, the Russian authorities temporarily banned the passage of tankers with LPG through the Kerch Strait, but this spring the restrictions were lifted.

Shipments of liquefied gas from Kazakhstan may increase after 2025, when a gas processing plant (GPP) with a capacity of 1 billion cubic meters per year at the Kashagan field should be launched, Argus Caspian Transport believes. Initially, the plant was planned to be launched in mid-2023, but then the deadline was moved. The enterprise is expected to produce 119 thousand tons of LPG per year, which can be exported. The countries of Europe and the Mediterranean region can become potential directions of deliveries, market participants believe. At the same time, the government is studying a project to build another gas processing plant in the Kashagan region with a capacity of 4 billion cubic meters per year.

Nina Adamova from the CEP of Gazprombank notes that, despite the fact that the volume of LPG imports to Kazakhstan from Russia in 2023 is planned to be small, this will improve the balance in the domestic Russian market and support prices. After the outbreak of hostilities in Ukraine, LPG quotes inside the Russian Federation collapsed due to the cessation of exports to Europe and Ukraine, and until March 2023, prices were at a historical low. In mid-April, this trend changed, and gas-chemical raw materials began to actively rise in price, now approaching the level of 25 thousand rubles. per ton on the SPIMEX exchange. This is 4.5 times more than prices at the beginning of the year, and about 10% lower than at the end of January 2022.

Olga Mordyushenko