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EBRD finances natural gas storage and distribution in Kazakhstan

By Svitlana  Pyrkalo

KazTransGas operates natural gas transmission and distribution pipelines and underground storages

русский перевод

Bank lends up to €294 million to strengthen natural gas sector

The European Bank for Reconstruction and Development (EBRD) is providing up to €294 million in local currency equivalent for two ground-breaking projects to increase the use of domestically produced natural gas and largely replace the use of coal in Kazakhstan.

The first project is the upcoming modernisation and refurbishment of the underground storage in Bozoi in the Bank’s first-ever cooperation with the national gas company KazTransGas (KTG). An EBRD loan equivalent to €242 million in local currency to the KazTransGas subsidiary Intergas Central Asia will allow for the upgrade of the storage to its full capacity of 4 billion cubic metres (bcm), from the current limit of 2.6 bcm.

This planned upgrade of the storage capacity will help ensure the stable supply of gas from the west of the country to the populous south-eastern regions and ultimately reduce dependency on coal-generated electricity.

The second project is a loan in tenge equivalent to €52 million to KazTransGas-Aimak for the expansion and modernisation of the natural gas distribution network in several regions of Kazakhstan. The upgrade will allow the company to connect new households and industrial customers to gas supplies, replacing the current carbon-intensive energy sources, mainly coal.

Extensive use of carbon-intensive energy sources, including burning coal for the heating of households, is a significant cause of greenhouse gas emissions in Kazakhstan. In response the country has adopted a Green Economy Strategy and one of the government’s priorities is the development of a domestic gas transmission and distribution system connecting the country's producers with its consumers.

Replacing coal-fired facilities and allowing the population to switch from coal to gas will benefit the environment and contribute to Kazakhstan’s efforts to fulfil its COP21 commitments. It is estimated that the EBRD-financed projects will lead to a reduction in CO2 emissions of around 830,000 tonnes per year.

The two projects were signed during the visit of EBRD President Sir Suma Chakrabarti to Kazakhstan today on the sidelines of the Astana Economic Forum. Sir Suma said: “We have worked consistently with Kazakhstan on projects which develop the green economy.  Few approaches create such immediate progress as a switch to cleaner sources of energy. Gas is much cleaner than coal and helps to complement renewable energy. We are very pleased to start our cooperation with KazTransGas and to continue our enhanced partnership with Kazakhstan with these two major steps towards a sustainable future.”

Kairat Sharipbayev, Chairman of the Board of KazTransGas, added: “This is the first cooperation between the EBRD and KazTransGas, but I am sure it will be the first of many to come. We are already discussing new opportunities for investment and technical cooperation in the area of energy efficiency. This is especially relevant for the upgrade of gas compressor stations and other infrastructure that will improve profitability and reduce greenhouse gas emissions. Our project will assist in meeting the objectives set by President Nursultan Nazarbayev for the gas industry. Today Kazakhstan has a reliable and modern gas transportation system.”

To date, the EBRD has invested over €6.5 billion in the Kazakh economy. The Bank is active in all sectors of the economy with a focus on diversification and sustainable energy. The EBRD and Kazakhstan are also linked with each other in a comprehensive partnership agreement.

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