Oil & Gaz Industry in Kazakhstan

Kazakhstan has the second largest oil reserves as well as the second largest oil production among the former Soviet republics after Russia. The country also has large reserves of natural gas and production of both oil and gas is steadily increasing. It is aiming to become one the world’s top oil exporters in the next decade based on the development of 3 major oilfields. There are more than 200 oil and gas fields in the Republic.

The predicted extractable resources of oil are estimated to be 7.8 billion tons, and those of natural gas 7.1 billions m³. About 70% of these reserves are massed in the western oblasts of Kazakhstan, and the overwhelming part of the resources are associated with salt fields and lie at depths of over five thousand meters.

The predicted resources of the Kazakhstan sector of the Caspian shelf are estimated to be around 13.0 billion tons of standard fuel; however the successful development of the Caspian fields requires a significant volume of investment. According to foreign experts, the required cumulative investment could be as much as US $160 billion, of which about $10 billion would be for the initial stage of exploration, including field appraisal. So far, western companies have invested more than $7 billion.

Some constraint to obtaining investment for exploring the Caspian shelf is the lack of a solution to the status of Caspian Sea. This issue may have been resolved however with the agreement between Kazakhstan and Russia to partition the seafloor of the Caspian along the midline between the two countries. Similar agreements have been concluded among Kazakhstan and Azerbaijan, and Azerbaijan and Russia.

Predicted resources of the Aral basin account for about 2 billion tons of standard fuel. The high gas and oil potential and favourable geographic position in respect of the basic transport of groundwater arteries makes the Aral basin one of the most important regions in respect to future oil exploration operations.

With large amounts of associated natural gas in its oil fields, Kazakhstan is on the verge of being a net gas exporter. It’s also worth noting that Kazakhstan contains Central Asia’s largest recoverable coal reserves, and is the second largest coal producer in the Former Soviet Union after Russia.

Crude Oil Transportation

Kazakhstan’s geographic location means that the pipeline infrastructure through neighbouring countries has played an important role in the exploitation of Kazakhstan’s hydrocarbon resources, allowing it reach international markets.

The CPC pipeline, which has been operational since 2001, represents a major export route. It extends 1,510 km, originating in the Tengiz field, running through Russia and terminating at the CPC marine terminal on the Black Sea near the Russian port of Novorossiysk.

The UAS pipeline transports oil from fields in the Atyrau and Mangistau regions to Russia. The pipeline system runs for approximately 1,232 km, from Uzen in southwest Kazakhstan to the Caspian port of Atyrau, before crossing into Russia and linking with Russia’s Transneft system at Samara. In June 2002, Kazakhstan signed a 15-year oil transit agreement with Russia. Under this agreement, Kazakhstan will export at least 17.4 million tonnes per year (350,000 bopd) of crude oil using the Russian pipeline system.

The 1,767 km Baku-Tbilisi-Ceyhan pipeline delivers crude oil from Baku in Azerbaijan to a new marine terminal in the Turkish port of Ceyhan on the Mediterranean and is the first direct pipeline link between the Caspian Sea and the Mediterranean Sea. The Baku-Tbilisi-Ceyhan pipeline project is designed to transport up to 50 million tonnes (1.0 million bopd) by 2010. In May 2005, construction of the pipeline was completed and the pipeline began operating in July 2006. The Baku-Tbilisi-Ceyhan pipeline is expected to be largely dedicated to production from the Azeri-Chirag-Gunashli fields in the Azerbaijan sector of the Caspian Sea but to the extent there is available capacity, the Baku-Tbilisi-Ceyhan pipeline may be used to transport Kazakhstan crude oil shipped across the Caspian Sea to Baku by tanker.

In December 2005, China and Kazakhstan put into operation the 988 km Atasu-Alashankou pipeline, forming part of the Atyrau-Dushantsty pipeline. The initial capacity of the Atyrau-Alashankou pipeline is 10 million tonnes (200,000 bopd) per year, with a projected increase up to 20 million tonnes per year (400,000 bopd).