by Energy Focus
The oil industry of Kazakhstan continues the active development: in a foreseeable future the republic will signifcantly increase the oil extraction as well as proven hydrocarbon reserves
During the years of inde-pendent development Kazakhstan entered the list of leading oil producers of the world, possessing the largest oil reserves in the Caspian region.
According to the data of the Ministry of oil and gas of Kazakhstan, the recoverable oil reserves of the country are estimated at 4.8 billion tons, and BP Statistical Review of World Energy - 2011 demonstrates that Kazakhstan possesses 39.8 barrels (5.5 million tons) of proven oil reserves – 2.9% of world’s total reserves.
If we say about the decade period, then the signifcant increase of recoverable oil reserves was obtained: considering the reserves of the Kashagan feld – 1,847 billion tons, without them – 586 million tons, while the increase of gas condensate reserves is 25.5 million tons. Recall that about 30 oil felds with different reserves volumes were discovered in the republic in 2000-2010. Among them: Kashagan, Kayran, Kalamkas sea, Khazar, Auezov, Ashisay, Kenlyk, Kar-dasyn, Severnoye etc.
For the present time, 172 oil felds and 42 gas condensate felds are registered in Kazakhstan, including 80 felds, which are on the development process. It is symptomatic that over 50% of oil reserves are concentrated in 3 largest felds: Tengiz, Kashagan, and Karachaganak. As a whole, the felds are located on the territories of 6 out of 14 oblasts of Kazakhstan: Aktobe, Atyrau, West Kazakhstan, Karaganda, Kyzylorda and Mangystau oblasts. Approximately 70% of hydrocarbon reserves are concentrated in Western Kazakhstan.
Such concentration of geological resources reduces the cost of their development, but the geological features of felds, such as the mode of occurrence, high impurity content of chemically aggressive substances require careful drafting of their operation and sig-nifcant initial investments.
A high growth potential of hydrocarbon reserves still remains. This is, primarily, due to the fact that at present in some deposits there are held exploratory investigations, works on forecasting and identifying new prospective oil and gas felds, on acceleration of their exploration, development and putting into operation, in particular, in subsur-face of Caspian and Aral seas. The growth of resource potential is associated with regional seismic operations held in the Northern, Central and Southern Kazakhstan. Oil and gas industry of Kazakhstan is still in the zone of active growth, along with the preservation of its high investment attractiveness. One of the favorable factors for this is the positive dynamics of development of a global oil and gas market, stipulating expanded opportunities for products sales in external markets and the availability of excess fnancial liquidity affordable for investment to exploration and production Kazakhstan is the second largest state after Russia on oil production among CIS countries. Overall production in 2010 totaled 79.7 million tons, or 104.2% in relation to 2009, of which 71.2 million tons were sold for export. It should be noted that for 20 years of independent development the oil production in the country increased more than threefold. The government expects to increase total production to 95 million tons up to 2015. According to the "World Energy Outlook 2010" of International Energy Agency, in 2020 Kazakhstan will join the world's ten largest exporters of oil and gas - it is planned to produce 132 million tons of oil in the country, including the beginning of active exploitation of the Caspian offshore felds. Kazakhstan places great prospects for the expansion of production capacity of a number of already existing felds, frst of all Ten-giz (from 25.9 to 36 million tons per year by 2016), and the commissioning of the Kasha-gan feld (start of production according to the plan – in the end of 2012). It is worth noting that foreign oil and gas companies from the EU, U.S., Russia, China and other countries are actively represented in the feld of oil exploration and production, mainly due to the favorable investment climate of Kazakhstan and openness of the in-dustry for foreign participation. In fact, the very participation of foreign oil companies has allowed Kazakhstan to rapidly introduce into commercial operation such major projects as Tengiz, Karachaganak and others. Until today foreign investors determine the dynamics of oil and gas sector of the country.
For example, 60% of 107 billion dollars of investments to domestic oil and gas sector for the last 10 years fell on projects with foreign companies. These projects have provided a production of about 56 million tons out of 79.7 million tons of oil and condensate produced in the country last year.
However, Kazakhstan has a priority in the expansion of state participation in oil and gas projects, strengthening the responsibilities of foreign investors in the social sector and local content. The new conditions require from foreign investors a clearer formu-lation of the investment strategy that takes into account the interests of Kazakhstan as oil producing state and its long-term development goals.
However, these circumstances are not in any way affect the openness of Kazakhstan's oil and gas sector for responsible foreign investors, which is a long-term strategic priority for Astana.
Kazakhstan intends to actively participate in the entire spectrum of oil and gas projects. This is a consequence of the consolidation of the necessary experience and management under the auspices of the National Welfare Fund "Samruk-Kazyna" and the availability of fnancial resources of Kazakhstan oil and gas companies. For example, extractive "daughter" of the Kazakhstan national oil company "KazMunaiGaz" - JSC "Exploration & Production "KazMunaiGaz" intends to invest to exploration around $1 billion over the next three years, and capital investments to the main assets will reach to $2 billion.
In this case, it is also about the country's role in the global market. Kazakhstan is ready for large-scale investments to marketable oil and gas projects abroad. Even now "KazMunaiGaz", providing the state's interests in the industry, has a number of exploration, infrastructure and production assets in Romania, the UK and other countries. Kazakhstan exports the bulk of produced oil primarily by oil pipelines. Over the last decade two new major pipelines for oil exports were built.
First, the Caspian Pipeline Consortium (CPC) – with the length of 1580 km pipeline linking the Tengiz feld near the Caspian Sea with the Russian port of Novorossiysk, located on the Black Sea. The CPC, built in 2001, transports about 650 thousand barrels per day, or 32-33 million tons of oil, mostly produced by "Tengizchevroil" and JSC "Ex-ploration & Production "KazMunaiGaz" companies.
This summer it was started a project on expanding the output capacity of the CPC twice to 1.3 million barrels per day or 67 million tons per year.
Second, the pipeline connecting Western Ka-zakhstan felds with China. Construction of the pipeline was completed in 2006. In the foreseeable future it is planned to increase capacity from 11 million tons to 20 million tons due to the construction of additional pumping stations.
By the end of the decade it may also be im-plemented a large-scale project of Kazakhstan Caspian oil transportation system, taking advantage of the capacity of the Ba-ku-Tbilisi-Ceyhan pipeline. However, Kazakhstan intends to gradually shift the emphasis on the development of the downstream sector in order to increase the added value of products and better provide the domestic market with petroleum products.
In particular, by 2015 Kazakhstan will increase the volume of oil refning of the three existing refneries up to 17 million tons per year in the framework of conducted modernization, estimated at $3 billion. The present level of production at the refneries is about 13.7 million tons (Pavlodar petrochemical plant - 4.8 million tons, Atyrau refnery - 4.3 million tons, the Shymkent refnery “Petro-Kazakhstan Oil Products” – 4.58 million tons). After 2019-2020, according to industry development program, Kazakhstan plans to build one more refnery.