 Bright
future and prosperity of Kazakhstan - oil
and gas sector |
The progress of Kazakhstan towards the position
of a major oil producing country has started more
than a century ago. Oil and gas industry of Kazakhstan
is known for its rich century-long history and
now it is hard to overestimate the political and
economic significance of the oil and gas industry
for Kazakhstan.
The oil and gas industry, the major economic sector
is considered to be as the cornerstones of the
country's independence, economic security and
political stability and it is exactly known that
oil and gas all over the world is a subject of
trade and cooperation.
"The economic situation in Kazakhstan is favorable
right now. During the last three years we observed
an increase in GDP. This is mostly due to the growth
of the oil and gas sector and, of course, to the
increased amount of explored mineral resources,"
Minister
of energy and mineral resources, Mr. Shkolnik
stressed.
Oil and gas sector of Kazakhstan is the backbone
of the national economy of the republic and its
rapidly developing sector. Being the 12th nation
in the world in terms of proven reserves of oil
and gas condensate, Kazakhstan is rated 23rd in
the listing of the world leading oil-producing
countries. Kazakhstan is among the 15 nations
of the world having the largest hydrocarbon reserves.
"It is observed that Kazakhstan has grown very
fast during the last 10 years. So, according to
the estimates of oil reserves, we can say that in
the nearest future Kazakhstan will become a strong
oil state. Due to the fact that Kazakhstan and Russia
have a very extensive borderline and the same historical
background we can say that the oil sector in Kazakhstan
as well as in Russia is very dynamically developing
right now," said Mr.
Danbai, General Director of Helios, the most
famous oil and gas service company in Kazakhstan.
"Helios" distributes oil products to refineries
through the republic territory. It works with such
large companies as Kazakhmys, Kazzinc, Ispatkarmet,
and AluminumKazakhstan, which are their wholesale
customers. It also works with many small companies
that consume fuels and conduct retail sale through
our gas stations network. Currently the company
has a network consisting of 80 gas stations with
1400 employees. 5. "Today with the network
of 130 service stations around Kazakhstan Helios
continues developing fully integrated business services
to its clients by offering more than gasoline, such
as introducing Smart card paying system…"
Mr. Danbai said.
Oil and gas bearing regions take an area of about
1. 7 mln. sq km, it is approximately 62 % of the
entire territory of Kazakhstan. Oil and gas fields
are found in 6 of the 14 administrative regions
of Kazakhstan. But 70 % of hydrocarbon reserves
are amassed in West Kazakhstan.
The future development of Kazakhstan's oil and
gas industry is associated with the Caspian Sea,
Sea of friendship and cooperation. The area of
the Kazakh sector of the Caspian Sea is over 100
thsd. sq. km, with expected hydrocarbon reserves
estimated at over 13. 0 bn tons (100 bn bbl) of
reference fuel.
Hydrocarbon resources explored at 250 oil fields
amount to billions of tons. Increase of production
become possible owing to drilling of new active
wells, implementation of modern technologies,
development of new oil and gas fields.
There are such gigantic fields as Tengiz recoverable
reserves exceeding 1 bn tons (7. 3 bn bbl), the
oil and gas condensate field Karachaganak with
oil and gas condensate reserves of some 5.1 bn
bbl and those of gas 1. 3 tcm. The volume of recoverable
reserves of the Kazakh Caspian shelf are estimated
at over 13 bn tons (100. 0 bn bbl). The expected
reserves of recent discovery Kashagan structure
in North Caspian amount to 2. 7 bn tons (20 bn
bbl). The 2002 crude oil and condensate production
is estimated at 45 mt (900 thsd bbl per day),
gas production to 14. 0 bcm.
At present drilling of two exploratory wells and
one production well has been completed at the
structure of Kashagan. Development of other promising
blocks besides Kashagan within the Kazakh sector
of the Caspian Sea is to be started after the
government of Kazakhstan adopts the Program of
development of the Kazakh sector of the Caspian
Sea in late 2002.
The availability of large reserves allows expectations
of considerable production volumes in the years
to come. According to the preliminary estimations,
oil and gas condensate production will reach 60
mta (1. 2 mln bbl per day) and gas production
20. 5 bcm per year (56. 1 mln. cu m per day) by
2005. The estimated volumes for 2010 are 100 mta
(2. 0 mln bbl per day) and 35 bcm (95. 8 mln cu
m per day) respectively. According to the official
data, the production volume of goods in the mineral
raw materials complex of Kazakhstan makes at the
moment about 44 % from the total production. Out
of that 39 % are coming from oil and gas sector
and 5 % - from other natural resources' sectors.
" Our energetic sector plays a very important
role in the economy of Kazakhstan. First of all
it depends upon mining, oil and gas industries.
This is an advantage and disadvantage of the economy
of Kazakhstan at the same time,"- Mr.
Yelemanov, Chairman of Azimut Energy Services
said in interview.
Oil export is also growing, but even more rapidly
than production. The tendency demonstrates the
commitment of the country to strengthen the position
of Kazakhstan on the world fuel and energy markets.
"Up to 30% of the revenues of the budget are
compiled by the revenues from the oil and gas sectors.
About 10% of revenues are coming from the export
of ferrous and non-ferrous metals. That means that
in the current budget about 40% of revenues are
the so called traditional for Kazakhstani economy
types of commodities. This is oil and gas, ferrous
and non-ferrous metals and grain," Minister
of economy and trade, Mr.
Yessenbayev said about the revenues in oil and
gas sector.
Kazakhstan has an impressive annual growth of
volumes of oil extraction. Last year it was 40
million tons of oil. This year Kazakhstan planning
to extract 45 million tons of oil. And something
like by the year 2010 we are planning to extract
more than 100 million tons of oil per year.
In the oil sector more than 83 % of oil is extracted
by private companies. And only 17 % are extracted
by our state company "KazMunaiGas".
"Many companies work in the oil and gas sector
such as Exxon Mobil, Agip, Philips Petroleum, TotalFinaElf,
Shell, British Gas, and British Petroleum. Currently,
only 10% of explored oil belongs to the state and
other 90% is private, which means that the national
company KazMunaiGas and the rest by private companies
explore about 5 million tons of oil," Mr. Shkolnik
said. All in all, foreign companies invested USD
5 bn in the oil and gas industry of Kazakhstan since
1991. |
Kazakhstan
founded the National Oil Fund. The source for
this fund are the over and above the plan receipts
from the enterprise of oil and gas and mining
sectors. The scheme is the following. In case
if the budget based on the price of USD 19 per
barrel, then if this parameter is higher, the
difference is forwarded to the National Oil Fund.
In case when the price goes lower than the one
defined by the state budget, certain amounts from
the oil fund are forwarded for financing the budget.
Thus, the oil fund performs two main functions.
The first one is the accumulative one. The fund
accumulates financial resources for future generations.
This is the first function, saving or accumulative.
And the second function is the stabilizing one.
In case of fluctuation of prices for raw material
resources the fund covers shortage in the state
budget.
There
is a lot to do in terms of infrastructure, since
the system of long distance transportation of
oil. The republic has to develop the infrastructure
and fist of all pipelines.
"In fact there is a serious danger for those
countries, which orientate their economy at the
oil and gas sector. I have to say that in this respect
during the last two years we have taken a few measure
aimed at the prevention of the repetitive case of
the 'Dutch disease'. In particular we have established
a National Oil fund, where the additional revenues
from the oil and gas sector are coming in,"
Minister of economy and trade, Mr
Yessenbayev said. Currently, the fund has accumulated
more than one billion six hundred million dollars.
Taking into account that it exists a bit longer
than one year we can easily calculate how fast it
is forming.
Kazakhstan
produces more and more oil every year, there is
an apparent tendency of increasing production,
but at the same time Kazakhstan has problems with
transportation of its crude to world consumption
markets.
It lacks sufficient transporting routes, being
situated in the center of Eurasian subcontinent
About
10,700 km of pipelines are operational in Kazakhstan,
principally in the west of the country. Existing
pipelines are used to deliver oil to the three
Kazakh refineries (in Atyrau, Shymkent and Pavlodar),
and to the refineries located in Southern Russia
and the Ukraine, as well as to international markets.
A quantity of oil is shipped by tankers to Baku,
where it is transferred into Azerbaijan's pipeline
system (the Makhachkala-Tikhoretsk-Novorossiysk
pipeline). Another, larger quantity of Kazakh
oil is transported by rail to Western Europe.
Kazakhstan
pins high hopes on the "Caspian Pipeline
Consortium" (CPC), which has already started
its operations. Baku-Ceyhun pipeline project considered
to become one of the alternative variants, which
does not impact our partnership with all other
countries. The joint capacity of export pipelines
exceeds 310. 0 mln. bbl per year, the capacity
of export through gas pipelines is 5. 0 bcm per
year, and that of transportation all together
per gas pipeline is 110. 0 bcm per year.
International
oil transportation of oil is also carried out
through the international seaport of Aktau. Several
oil -loading terminals, up to date handling equipment
provide for day load of 60-70 thsd. bbl of oil
per day. The company "Kazmortransflot",
established in Kazakhstan, has chartered 10 tankers,
which in due course provide for 50 % of sea shipping
in the Caspian Sea.
Rapid
development and even more impressive perspectives
of Kazakh oil producing sector provide favorable
conditions for the emergence of a strong oil refining
industry, capable of covering the demand of the
internal market for oil and petrochemical products,
and allowing to supply these products to the external
markets.
Kazakhstan has three refineries with combined
capacity of 18. 5 mta (370 thsd. Bbl per day),
three gas processing plants with the capacity
of 6. 25 bcm per year (17. 1 mln cu m per day),
and three underground gas storage facilities accounting
for 4. 1 bcm. It is enough to refine slightly
less than half of the oil currently produced in
the country.
Kazakhstan has created a proper, international legislative
base for the development of hydrocarbon resources
for the last few years and significantly improved
its investment climate. "We had to create a
new legislature and implement privatisation. Only
this allowed the development of the energy sector
and the attraction of new investments. It was our
main challenge and we overcame it," Minister
of Energy, Mr.
Shkolnik said.
According
to the international financial institutions, Kazakhstan
holds one of the leading places among the countries
with transitional economies, by the amount of
investment attracted to the oil and gas sector.
But not all foreign investors fulfill their contractual
obligations.
Import
substituting programs lack in effectiveness, including
investment in oil machine-building industry, development
of service business, oil refining and petrochemistry,
social infrastructure, etc. Many problems do exist
in terms of Caspian seabed division and the very
recent intergovernmental milestone agreement was
reached between Kazakhstan and Russia on the delimitation
of the North Caspian seabed, which allows exploration
of resources in sovereign rights.
Ambassador
of Russian Federation, Mr. Merzlyakov explained
"It is only a protocol to the agreement signed
previously back in 1998 on the 6th of July, which
was called "The agreement on the delimitation
of the Northern Caspian sea bed for the purpose
of subsoil use" - briefly. This protocol provides
for the actual delimitation, the modified median
line, which is used as a line delimiting the jurisdiction
over the mineral resources, oil, the jurisdiction
of both countries in the Northern Caspian for the
subsoil use only. It provides also for the conditions
for the companies on both sides taking part in the
exploitation of these concrete deposits or in the
further exploration of the known prospective structures,
which can become deposits, or may not."
State secretary - Minister
of foreign affaires, Mr. Tokayev also expressed
his opinion on this issue "We have huge offshore
oil reserves in the Caspian Sea, and the geography
itself is very favorable for Kazakhstan. If there
were a middle line, which will determine the geopolitical
stature of the Caspian Sea, 29% of the entire Caspian
Sea will belong to Kazakhstan. For example, for
Russia it will only be 19%, for Iran for example,
it will be less than 10%. This is the reason why
we are insisting on the determination of the juridical
stature of the Caspian Sea by outlining the middle
line."
The
current state and future development of gas industry
of Kazakhstan is determined by the large resource
base of natural and associated gas and by the
vexed need to address issues of the most profitable
realization of recovered reserves. The main feature
of the resource base of the country's gas industry
is that the gas reserves mainly associated with
oil, oil and gas condensate fields.
There
are 66 fields having industrial gas reserves and
only seven small fields are stand alone gas fields.In
the next few years it is expected that the reserves
will increase at least by 1. 5 -2. 0 times due
to resources of new fields discovered on the Caspian
shelf. Gross gas output exceeds 12 bcm with the
associated gas constituting its major part. In
future substantial development of gas-recovery
is expected, mainly on the account of to the increasing
oil recovery.
Lop
-sided allocation of the trunk gas pipelines on
the territory of Kazakhstan impedes full-scale
gas utilization and total gasification of the
country. At the moment only 8 areas of the country
are supplied with gas while almost 60 % of supplied
gas is imported.
The
Government of the country is now working on the
industry's development program. It is aimed at
expanding the throughput of existing gas pipeline
system and constriction new ones, expanding capacities
of gas processing plants and building new facilities,
developing gas-based power generation industry
and increasing liquefied gas production. Gas exports
mainly to Western and East Europe, is of great
importance in the gas strategy of the country.
Apart from Caspian shelf reserves the explored
Kazakh resources of natural gas make 1. 8 tcm.
Over 95 % of gas reserves are concentrated in
142 fields in free dissolved form.
The
2001year production reached 12. 8 bcm of gas.
Compared to the 1990 production rate Kazakh gas
recovery was steadily decreasing until 1994. It
started to increase in 1995 mostly at western
part of the country. There are currently 14 operating
gas-producing companies. Three companies accounting
for more than 90 % of gas production are "Karachaganak
Petroleum" (41. 3% of total Kazakh gas recovery
in 2001), "Tengizchevroil" (34. 8%)and
"Uzenmunaigaz" a subsidiary of the national
oil company "KazMunaiGaz" (14%).
The biggest growth potential of Kazakhstan lies
in its oil and gas reserves, exports and infrastructure..
The country possesses 60% of the Caspian potential
oil reserves and will without any doubt become
a major oil and gas state in a near future.
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