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    Chinese-Kazakh Pipeline JV Secures Loan


The joint venture will use the funds to refinance a loan taken out to fund construction of a pipeline that flows Kazakh gas to China.

by: Dalga Khatinoglu

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Chinese-Kazakh Pipeline JV Secures Loan

The Beineu-Shymkent gas pipeline joint venture between Kazakhstan's KazTransGas (KTG) and China's Trans-Asia Gas Pipeline has signed a $720mn syndicated loan with international banks, in order to refinance its debts, KTG said in an August 16 statement. Japan's MUFG Bank and Bank of China helped organise the financing.

Beineu-Shymkent operates a pipeline that carries gas from western to southern Kazakhstan. Its capacity reached 15bn m3/yr in February this year, following the launch of a new compressor station, with two thirds of this capacity designated for sales to China and the remainder for meeting demand in the southeast of the country, which has depended on Uzbek gas supplies for decades.

The new loan will be used to refinance a previous loan drawn from Bank of China and China Development Bank (CDB) to fund the pipeline's construction in 2012. The guarantees of KTG and its parent company, national oil company KazMunayGas (KMG), made it possible to borrow the funds on more attractive terms, KTG said, with interest rates set to fall by $10mn/yr.

Kazakhstan exported 26.5bn m3 gas last year, including 5.4bn m3 to China, while also importing 6.6bn m3, of which 2.4bn m3 was Uzbek gas. KTG struck a five-year deal to sell 10bn mof gas to China annually in 2018, building on a contract for half that amount it signed a year earlier.