Beijing: China and Kazakhstan to Expand Cooperation in Natural Gas

China National Petroleum Corporation (“CNPC”) recently entered into a framework agreement with KazMunaiGaz, Kazakhstan’s national oil and gas company to expand cooperation in natural gas.

KazMunaiGaz has agreed to annually supply five billion cubic meters of natural gas to phase II of the Kazakhstan-China Gas Pipeline, and ensure the transport of natural gas produced by CNPC from the Aktobe field via such pipelines.

Meanwhile, the two sides will jointly develop the Urikhtau gas condensate field and export 5-10 billion cubic meters of natural gas to China on a yearly-basis, subject to the demand in southern Kazakhstan.

Based on the above, the two companies will jointly construct and operate the Beineu-Bozoy-Kyzylorda-Shymkent section of the Kazakhstan-China Gas Pipeline, the natural gas transport capacity of which is designed to be 10 billion cubic meters per year.

The parties also agreed to expand phase I of the Kazakhstan-China Gas Pipeline based on further assessment of incremental natural gas resources.

According to the joint statement of China and Kazakhstan, the Kazakhstan-China Gas Pipeline is a milestone project for cooperation between the two countries, which is expected to be completed by the end of 2009.