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Kazakhstan Could Be Forced To Halt Gas Exports In 2023

The head of Kazakhstan’s national gas company sounded the alarm bells Monday over a looming energy crisis, suggesting that the country may be forced to halt gas exports in 2023. 

Citing expectations of a gas shortage in 2023-2024, QazaqGaz CEO Sanzhar Zharkeshov told the Kazakh parliament on Monday that the country would not be able to meet soaring demand. 

"We expect a shortage of gas starting from 2024. The domestic demand is anticipated to be 1.7 billion cubic meters higher than the existing gas resources. If no urgent measures are taken, the exports of gas will need to be stopped in 2023," Russian Interfax quoted Zharkeshov as saying.

The QazaqGaz head cited mounting requests for gas supply from large customers ranging from coal-to-gas power plant conversion projects to new gas and chemical complexes and other large commercial customers. 

Citing the need for “urgent measures”, Zharkeshov is calling for an increase in Kazakhstan’s commercial gas reserve base from 2022 to 2030, with a shifting of available reserves to the domestic market this year. 

At the same time, Kazakh Energy Minister Bolat Akchulakov told parliament that domestic gas consumption growth is rising 7% annually. The Energy Minister predicted that the country would suffer from domestic gas shortages and be forced into dependency on imports by 2025, Kazinform reported

Gas consumption in Kazakhstan grew by 4.8 billion cubic meters between 2017 and 2021, the Minister said. 

In an effort to boost gas production and stave off a domestic gas crisis, the Kazakh Energy Ministry has proposed a package of measures to reduce the tax burden on new gas projects. Those measures would include fiscal preferences for gas projects with exemption from tax. More specifically, they would include exemption from corporate income tax for 10 years from the start of production, as well as exemption from export customs duties for the same period. 

Russia’s war on Ukraine and subsequent Western sanctions have significant implications for Kazakhstan, where oil and gas accounts for some 75% of exports, primarily routed through Russia, while oil and gas revenues account for around 35% of GDP, according to The Diplomat

By Charles Kennedy for Oilprice.com

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