China, Uzbekistan sign accords on gas, uranium

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 16 -- Chinese President Hu Jintao and Uzbekistan’s President Islam Karimov signed a number of agreements regarding the purchase of energy from Uzbekistan, including uranium and natural gas.

In connection with Hu’s state visit, Uzbekistan’s state-owned Uzbekneftegaz and China National Petroleum Corp. signed a framework agreement on supply of 10 billion cu m (bcm)/year of gas.

The two sides also noted that, under the accord, they would aim to link Uzbekistan's gas transmission system with the China-Uzbekistan gas pipeline.

The China-Uzbekistan gas line is part of the 1,800-km China-Central Asia gas line that opened in December 2009, linking gas fields in Turkmenistan, Uzbekistan, and Kazakhstan to northwest China's Xinjiang region.

In May, official media reported that deliveries of Turkmen natural gas to China had exceeded 1 bcm since the December 2009 launch of the new gas line, with a further 5 bcm expected by yearend.

New agreement
Meanwhile, the new agreement between China and Uzbekistan came just days after the South Korean government announced that a significant amount of gas has been found in an Uzbekistan block equally owned by a Korean consortium and four countries.

Initial drilling, which ended in April, produced 500,000 cu m/day of gas, according to South Korea’s Ministry of Knowledge Economy, which also said that the block “likely” has a gas reserve that can be converted into 63 million tonnes of LNG.

The Korean consortium comprising Korea National Oil Corp. and Posco owns a 20% stake in the Aral Sea block, while Uzbekistan, Russia, China, and Malaysia each own a 20% stake in it, the Korean ministry said.

In addition to the gas agreement, China and Uzebekistan also agreed on further cooperation in the supply of uranium, a point underlined by the Chinese leader.

"One of the questions we discussed was that of long-term and stable cooperation in the field of…uranium,” said Hu, adding, “It's necessary to work in such a way to develop natural uranium and uranium fields.”

During Hu’s visit, Uzbekistan’s state-owned Navoi Mining & Metallurgy Combine and the China Guangdong Nuclear Power Co. signed a contract for the supply of uranium, but details of the agreement were not made available.

The new accord follows reports that China imported 425.97 tonnes of uranium in April, lower than the 550.8 million tonnes shipped in during March and sharply up on year, according to the General Administration of Customs.

China’s imports of uranium have been increasing in accord with Beijing’s plans to raise nuclear power's contribution to 5% of total generating capacity by 2020, from less than 2% now. Ahead of that increase, China is said to be stockpiling supplies of uranium.

According to one industry analyst, China's two licensed uranium importers—CGNPC and China National Nuclear Corp.—are importing far more uranium than the country's actual requirements, bringing in “roughly 2-4 times its actual requirements” last year.

Contact Eric Watkins at [email protected].