Kazakhstan starts building gas pipeline to China

By Olzhas Auyezov

NEAR ALMATY, Kazakhstan, July 9 (Reuters) - Kazakhstan joined construction of a pan-Central Asia pipeline on Wednesday, a major project to link up Caspian Sea gas reserves with energy-hungry China.

The pipeline is the first significant independent gas link connecting the former Soviet region with eastern markets while bypassing Russia. Russian gas monopoly Gazprom (GAZP.MM) is currently the main buyer of Central Asian gas.

Under the scorching sun of southern Kazakhstan, Kazakh and Chinese flags flapped in the wind as engineers assembled segments of the pipeline in a symbolic ceremony attended by senior energy officials.

"This project will be implemented in five stages with the final stage scheduled for completion by 2013," said Sauat Mynbayev, Kazakhstan's energy minister.

The ceremony was held on the open steppe 40 kilometres (25 miles) north of the commercial hub Almaty -- one of 3 sites in Kazakhstan where construction began simultaneously on Wednesday.

The Kazakh link is part of a route that links Turkmenistan's natural gas deposits with China via Uzbekistan and Kazakhstan.

Uzbekistan also started construction of its part this month while Turkmenistan launched its segment last year.

Gas shipments will start in 2010 at 4.5 billion cubic metres (bcm) a year and will eventually reach 40 bcm a year. China will receive 30 bcm and Kazakhstan 10 bcm for its southern regions which face an energy deficit due to growing consumption.