Official Source of the
Prime Minister of the
Republic of Kazakhstan
Close button

Oil production, gas supply and investment attraction — review of energy sector in Kazakhstan

Thursday, 28 May 2020, 01:23:11

Today at a reporting public meeting, Minister of Energy Nurlan Nogayev spoke about the development of the main directions of the energy industry.


Kazakhstan adjusted oil production plan in 2020

According to the minister, in 2020 oil production of 90 million tons was planned, but in the current situation, due to the reduction in prices and the spread of coronavirus in the world, plans have been adjusted.

“This year we plan to produce 86 million tons of oil — that is, 4.5% lower than planned. Kazakhstan has joined the OPEC + agreement, which enables us to avoid overstocking tanks and a possible shutdown at some fields,” Nogayev explained.

Participation in the OPEC + agreement is aimed at restoring the balance of supply and demand, restoring oil prices. In order to avoid the risk of overstocking oil, the Ministry of Energy decided to limit production in medium, large and giant fields. A fair distribution of obligations to reduce oil production for all types of fields was envisaged.

“In the event that we would not reduce oil production, this could lead to overstocking of oil storage facilities in the second quarter of 2020, to a shock stop of production at some fields. Thanks to participation in the transaction, all market players came to a controlled and smooth reduction in oil production. We made the reduction as painless as possible, avoiding a complete stop of production at some fields,” Nogayev said.

In May-June 2020, the member countries of the OPEC + Agreement plan to reduce total oil production by 9.7 million barrels per day. Kazakhstan has committed to reduce production by 390 thousand barrels per day. The average daily oil production (without condensate) in Kazakhstan as of May 25 is 177.8 thousand tons of oil, which indicates the fulfillment of the obligations of the OPEC + transaction.


Oil refining remains at the same level

According to the minister, in 2019 the volume of oil refining increased by 4.4% compared to 2018 and amounted to 17.1 million tons (taking into account Condensate JSC and Caspibitum LLP). It is planned to process 17 million tons in 2020. At the same time, the volume of production of the main types of petroleum products (jet fuel, diesel, gasoline, fuel oil) in 2019 increased by 9.5% by 2018. This year's plan is 12.5 million tons.

The decrease in fuel and lubricants consumption in Kazakhstan did not entail the need to change the targets for oil refining, while it remains at the same level — 17 million tons of oil.

In July 2019, after the ban was lifted, gasoline export began to the countries of Europe and Central Asia. The volume of gasoline exports amounted to 180.7 thousand tons. Further, in order to ensure stable oil refining by domestic refineries and to prevent overstocking of petroleum products, the ministry, together with interested state bodies, took the following measures:

  • The ban on the export of petroleum products by road outside the Republic of Kazakhstan was lifted;
  • The ban on petroleum products outside the countries of the Customs Union was lifted;
  • Manufacturers of excisable goods for gasoline and diesel fuel, exported, are exempted from paying excise taxes;
  • A ban was introduced on the railway supply of gasoline and diesel fuel from the Russian Federation to the Republic of Kazakhstan;
  • The rates of export customs duties on petroleum products, including gasoline, diesel fuel and fuel oil, were zeroed.


Continuing work at leading refineries and developing petrochemical industry

It should be noted that in 2019, despite the overhaul of major projects, the volume of oil production reached 90.5 million tons, oil and condensate export amounted to 72.2 million tons. The forecast for 2020 is 67.5 million tons.

Currently, the project for the future expansion of Tengiz worth $45.2 billion, where 36% ($16 billion) is the Kazakh content. About 230 domestic service companies participate in construction work, metal fabrication and other works. Upon completion of the project, it will be possible to produce an additional 12 million tons of oil.

Kashagan is expected to continue work on the implementation of projects for the construction of a new gas processing plant and the modernization of compressors in order to achieve a production level of 450 thousand barrels per day by 2022. Together with the contracting companies, a Road Map will be adopted for the second stage of the Kashagan field.

The construction of a gas processing plant with a capacity of 1 billion m³ will additionally produce about 8 million tons of oil during the contract period and obtain 700 million m³ of marketable gas.

Under the Karachaganak project, investment projects are in the active phase and ahead of the implementation schedule. In December last year, the 5th field pipeline was commissioned, designed to modernize the existing infrastructure of the gas re-injection network.

Also in 2019, overhaul of production facilities was successfully carried out, which allowed to increase production by more than 300 thousand tons and maintain a stable high level of production. The launch of these projects will continue to maintain the level of production of liquid hydrocarbons in the range of 11-12 million tons annually.

In addition, the republic has already created and successfully operates enterprises for the production of lubricants, road bitumen, aromatic hydrocarbons, as well as polypropylene and an octane-raising additive for MTBE type gasoline.

At present, four plants are operating, producing more than 700 types of motor, transmission, industrial and other oils with a total capacity of 145 thousand tons per year:

  • HILLCorporation LLP — 30 thousand tons (South Kazakhstan region);
  • Semipalatinsk Oil Plant LLP — 5 thousand tons (East Kazakhstan region).
  • LUKOIL Lubricants Central Asia LLP — 100 thousand tons (Almaty region).
  • Eva Oil LLP — 10 thousand tons (Pavlodar).

At the Atyrau Refinery, benzene and paraxylene are produced with a capacity of 133 thousand tons / year and 496 thousand tons / year, respectively. At the end of 2019, about 147 thousand tons of products were produced.

There is also a plant for the production of polypropylene and additives for gasoline — Methyl tert-butyl ether (MTBE) in the Pavlodar region. In 2019, 28 thousand tons of polypropylene and 20 thousand tons of MTBE were produced.

In 2018, in the Atyrau region, on the territory of the petrochemical free economic zone, the construction of a gas-chemical complex for the production of polypropylene with a capacity of 500 thousand tons / year, worth $2.6 billion, was scheduled for completion next year.

Also on the territory of the SEZ, it is planned to implement a project for the production of polyethylene with a capacity of 1.25 million tons per year.

In the Turkistan region, the construction of a plant for the production of polypropylene and octane-raising additives for gasoline is underway, with a capacity of 80 thousand and 60 thousand tons, respectively.

In addition, in the Mangistau region, a $1.8 billion project for the production of methanol (with a capacity of 1.5 million tons / year) is at the design stage.

Only the implementation of these projects will attract investment in the amount of about $11 billion, create more than 13,000 jobs at the construction stage and more than 1,500 permanent jobs. The contribution to the GDP of the two projects is estimated at almost 1.9%.

In addition to the above-mentioned projects, today at various stages of development are projects with a total value of $3 billion, the implementation of which is planned in the Zhambyl, Atyrau and Turkistan regions.

To attract investment in the development of the petrochemical industry, the ministry provides accented state support.

“At present, the Ministry of Energy has created a Petrochemical Design Group, which includes representatives of companies and operating plants. Within this group, we work closely with the Ministry of Trade and Integration to accelerate the export of petrochemical products. Thus, the production of basic petrochemical products will serve as a solid foundation for the development of deep processing in the oil and gas sector, which is consistent with our strategy to diversify the commodity economy and the desire for technological development,” Nogayev explained.


Developing local production and gas supply in the country

Currently, the ministry pays great attention to the development of local content in the procurement of goods, works and services of subsoil users. So, in 2019, when conducting oil operations, the share of Kazakhstani goods amounted to almost 20%, and work and services reached almost 50%. Uranium operations also show growth.

To ensure the undoubted advantage of the purchase of domestic goods, the ministry amended the Rules for the acquisition by subsoil users and their contractors of goods, works and services used in operations for the exploration or production of hydrocarbons and uranium mining. These changes will allow subsoil users and their contractors to purchase goods of Kazakh origin from a single source without competitive procedures. At the same time, the goods must have the ST-KZ certificate or an industrial certificate issued by the Atameken National Chamber of Entrepreneurs of the Republic of Kazakhstan.

According to Nogayev, gas production in 2019 amounted to 56.4 billion m³, which is 102.5% of the plan. At the same time, in 2019, commercial gas production amounted to 33.1 billion m³ or more than 105.8% of the plan.

“This year, in connection with the current situation, it is planned to reduce the production of marketable gas from 32 billion m³ to 28.1 billion m³, i.e. by 12%. As part of the development of export potential, annual exports to China have been established. If in 2017, gas exports to China amounted to 1.5 billion m³, then already in 2019, exports approached 7.5 billion m³. Total, gas exports to all countries in 2019 amounted to 19.5 billion m³. Over the past 3 years, gas exports have grown by more than 40%,” said the minister.

This year it is planned to export 17.2 billion m³ of gas.

In 2019, the production of liquefied petroleum gas amounted to 3.19 million tons, which is 101.3% of the plan. This year, due to the current situation, it is planned to produce 2.8 million tons of liquefied petroleum gas.

In 2019, 88 gas supply projects were implemented at the expense of the republican budget for a total of almost 40 billion tenge (46 projects in 2018).

The country's gas suply level as of Dec. 31, 2019, reached 51.47%, an increase of 1.7% compared to 2018. About 9.5 million people have access to gas.

According to the results of 2020, it is planned to achieve a gas supply level of 52.23%.


Construction of Saryarka gas pipeline

To date, the construction of the Saryarka gas pipeline has been completed, the facility was commissioned on Dec. 27, 2019. Thus, 1,061 kilometers of the gas pipeline were built in record time, which testifies to the coordination of work and the high professional preparedness of specialists, the innovativeness of the technologies used in the process. During the construction of the gas pipeline, domestic manufacturers and suppliers are involved as much as possible.

The main gas pipeline will provide natural gas to residents of the cities of Nur-Sultan, Karaganda, Temirtau, Zhezkazgan and the neighboring 171 settlements along the gas pipeline (by 2030, approximately 1.5 million people).

The implementation of the project will bring a multiplier effect, will give impetus to the development of small and medium-sized businesses, which constitute the basis for the prosperity of the economy for the regions along the main gas pipeline, as well as our capital. To supply gas to the consumer, the Akimats of Nur-Sultan and the Karaganda region are currently constructing gas distribution networks in accordance with the approved schedules.

The issues of implementation of the subsequent stages of the Saryarka Gas Pipaline, that is, the construction of the Nur-Sultan-Kokshetau and Kokshetau-Petropavlovsk pipelines with a total length of 453 km, are considered.

The implementation of these steps will allow additional coverage of gas supply to a population of 1.1 million people. The volume of consumption will be more than 700 million m³ / year.


Electricity market development

In 2019, in the electric power industry, the volume of electricity generation amounted to 106 billion kWh. At the same time, electricity consumption amounted to 105.1 billion kWh, which shows that the needs of the country's economy for electricity are fully covered.

The minister also informed that a single buyer has been created in the electric power market. The company “Settlement and Financial Center for the Support of Renewable Sources” was determined as the Single Purchaser.

In 2019, more than 58 billion tenge of investments were attracted to the electric power generation sector. According to the 2020 plan, about 82.5 billion tenge is planned to be invested in the electric energy generation sector.

For the enlargement of energy transmission organizations, requirements have been established with their phased implementation. The mechanism for enlargement of energy transmission organizations is defined.

These measures should stimulate EPO enlargement by combining with each other or with regional electric grid companies, as well as termination of activities for the transfer of electric energy. The expected result is a 30% reduction in the amount of EPO, i.e. from 162 to 110.

“The length of ownerless networks since 2017 decreased by 2,125 km (2,350 km). As of the first quarter of 2020, the length of ownerless networks is 225 km. At the same time, as part of the work carried out by local executive bodies, new ownerless objects are identified,” Nogayev said.

As a result of the work, the tariffs for the transmission of electric energy of a number of monopolists have been reduced, and the quality of the services provided has been improving. Final results will be achieved in 2023.

Plans for 2020:

  • termination of 17 utility companies;
  • continued work by local executive bodies on the gratuitous transfer of ownerless electric networks to power transmission organizations.

The Energy Supervisory Committee shall verify all energy transmission organizations for compliance with the requirements for electricity transmission activities, which entered into force on Jan. 1, 2020.

According to the minister, the heating period in all regions of the country was organized, in a normal mode. The supply of electric and thermal energy to consumers was provided stably and steadily, in accordance with contracts and schedules.

“In 2019, the planned overhauls of the main equipment of the power enterprises were completed in full. Compared to 2018, more repairs were completed by three power units, seven boilers and one turbine. This year, it is planned to carry out repairs of 8 power units, 59 boilers and 44 turbines,” Nogayev informed.

Over the past heating period, 48 cases of station non-compliance with the temperature schedules of heating networks were recorded, which is 20% lower than the level of the previous heating period 2018-2019. At power plants, a standard fuel supply of more than 3 million tons of coal and 120 thousand tons of fuel oil was provided. In 2019, 3996 technological violations were committed in the UES of Kazakhstan. Compared to the same period last year, the number of technological violations decreased by 34 or 1.3%.

At the same time, in order to support the population, industrial consumers and entrepreneurs of the Republic of Kazakhstan, the Ministry of Energy of the Republic of Kazakhstan carried out work to prevent the growth of maximum wholesale gas prices.

It was decided to keep the marginal wholesale prices for commercial gas for the regions at the current level.

“The current wholesale cap for wholesale gas prices will curb retail gas prices for households, SMEs, and budgetary organizations, and how the multiplier effect helps limit tariffs for fuel and energy companies that produce heat and produce electricity,” said the minister.

Earlier on Jan. 1, 2019, the ministry reduced the wholesale prices for marketable gas in the range from 3.8 to 17.5% depending on the region, which allowed to reduce the final prices for electricity and heat in almost all gasified regions of the country.

The maximum wholesale gas prices for the period from July 1, 2019 — June 30, 2020, approved by the Ministry, were also kept at the current level.


Subsoil users financing research and development work

According to the minister, currently in Kazakhstan 235 contracts for the extraction and exploration of hydrocarbons have been registered, including: for exploration — 54, for joint exploration and production — 96, for production — 74, under the agreement on production sharing — 11. Twenty-five contracts were registered on uranium.

The volume of investment in exploration amounted to 158.4 billion tenge.

Currently, the ministry is carrying out work to fulfill the obligations of subsoil users to finance research and (or) development work.

To date, obligations for the financing by subsoil users of research and (or) experimental design work are provided for in 163 contracts (a total of 260) for subsoil use.

At the end of 2019, R&D financing by subsoil users amounted to 9.9 billion tenge.

At the same time, obligations on financing by the subsoil users of the training of Kazakhstani personnel are provided for in 256 contracts (260 in total) for subsoil use.

At the end of 2019, funding for the training of Kazakhstani personnel by subsoil users amounted to 21 billion tenge. According to the results of the year, more than 144 thousand Kazakhstani specialists completed the training, advanced training or retraining process at the expense of subsoil users.


Renewable energy development

According to Nogayev, the renewable energy market is growing rapidly every year, in 2019 2.4 billion kWh of green energy was generated with an increase of 77.8% compared to the same period in 2018. The share of renewable energy in the total volume of electricity production is 2.3%.

Last year, 21 renewable energy facilities were commissioned. In the first quarter of 2020, nine renewable energy facilities were commissioned. The total amount of attracted investments on renewable energy projects amounted to 103.4 billion tenge.

Thus, according to the results of the first quarter of this year, the number of renewable energy facilities amounted to 99 with a total capacity of 1361 MW. By the end of 2020, the generation of renewable energy will amount to about 3.15 billion kWh of electricity.

News feed
21 September 2020, 16:51
Government session to be held Sep. 22 in Ukimet Uyi 
17 September 2020, 18:56
Prime Minister Askar Mamin meets with President of Turkmenistan Gurbanguly Berdimuhamedov
17 September 2020, 18:45
Government of Kazakhstan discusses issues of social protection of disabled people
16 September 2020, 18:09
Yerlan Kiyasov appointed Vice Minister of Healthcare - Chief State Sanitary Doctor of the Republic of Kazakhstan
15 September 2020, 12:26
Work underway in Kazakhstan to saturate domestic market with basic products for stabilizing prices — Ministry of Agriculture
15 September 2020, 10:27
Price increase for socially significant food products will not exceed 6% by the end of 2020 — Ministry of Trade and Integration
15 September 2020, 10:07
Prime Minister of Kazakhstan Askar Mamin instructs to ensure strict control over stability of prices for socially significant food products
15 September 2020, 09:44
Under Industrialization Map in Kazakhstan, 206 projects worth 1 trillion tenge to be introduced in 2020
15 September 2020, 09:29
For 8 months of 2020, 4.3 thousand new jobs created under Industrialization Map — Ministry of Industry and Infrastructure Development
14 September 2020, 22:47
Introduction of Industry 4.0 in Kazakhstan, or how smart factories worked during quarantine period and global pandemic
14 September 2020, 18:42
Interdepartmental Commission adopts decisions on work of businesses
14 September 2020, 14:02
Government session to be held Sep. 15 in Ukimet Uyi
14 September 2020, 10:51
Strategic directions for development of Eurasian Economic Integration until 2025 considered at session of EEC Council
11 September 2020, 13:07
Prime Minister Askar Mamin introduces Minister of Emergency Situations Yuri Ilyin
10 September 2020, 23:45
Distance learning, epidemiological situation, provision of villages with Internet — how educational process organized in Kazakhstan
10 September 2020, 13:12
Production of electronics industry of Kazakhstan to increase 8.5 times over 3 years
09 September 2020, 15:06
Roman Sklyar pays working visit to Atyrau region
09 September 2020, 11:59
Ministry of Healthcare on CVI: In Kazakhstan, there is a 6-fold decrease in bed occupancy
09 September 2020, 11:31
Food production for 8 months of 2020 increased by 3.6% — Ministry of Agriculture
09 September 2020, 11:21
Market of Kazakhstan fully provided with petroleum products of domestic production — Nogayev 
09 September 2020, 11:19
In Kazakhstan, total volume of container transit traffic increased by 37% — Ministry of Industry and Infrastructure Development
09 September 2020, 11:02
Measures taken stabilized epidemiological situation in the country — Prime Minister of Kazakhstan Askar Mamin 
09 September 2020, 10:54
Following results of 8 months of this year, positive dynamics remains in basic sectors of economy
09 September 2020, 10:53
Government adopts National Plan for Implementation of Address of the Head of State to People of Kazakhstan
09 September 2020, 10:25
604 loans issued under Economy of Simple Things Program — National Bank
09 September 2020, 10:20
Following results for 8 months of 2020, state budget received 5.5 trillion tenge of revenues — Ministry of Finance
09 September 2020, 10:13
Growth in construction, agriculture and manufacturing industry — Ruslan Dalenov reports on results of socio-economic development for 8 months of 2020
09 September 2020, 10:06
Draft National Action Plan for implementation of President's Address includes 10 key areas
07 September 2020, 17:10
It is planned to double fines for violations in the field of environmental protection — Magzum Mirzagaliyev spoke about implementation of President’s Address
07 September 2020, 16:33
Digitalization of land relations to eliminate human factor, bureaucracy and corruption — Omarov on implementation of President's Address
07 September 2020, 16:27
Beibut Atamkulov on implementation of President's Address: Mechanism for subsidizing rent to be approved by the end of 2020
07 September 2020, 16:14
Government session to be held Sep. 9 in Ukimet Uyi
07 September 2020, 15:39
Focusing on industry and development of transport infrastructure in Kazakhstan — Roman Sklyar speaks about main aspects of President's Address
06 September 2020, 09:34
Video Digest: Main events of the week, No. 76
05 September 2020, 14:10
Session of EEC Council: Several issues of further development of Eurasian economic integration discussed
05 September 2020, 13:41
Production of stationary ventilators opened in Kazakhstan
05 September 2020, 03:37
Construction, Support for SMEs and Investment — how East Kazakhstan Region developed during the pandemic
05 September 2020, 01:46
Briefing to be held on measures to implement Address of the Head of State
04 September 2020, 17:33
New concept for improving local self-governance to be developed — Ruslan Dalenov on implementation of President's Address 
04 September 2020, 13:31
Additional 200 billion tenge to be allocated to support SMEs — Alikhan Smailov on implementation of President's Address
03 September 2020, 16:27
Ministry of Education and Science to develop uniform requirements for online education platforms
03 September 2020, 16:18
Implementation of President's Address: Free clubs to open in schools, National Crafts centers — in regions 
03 September 2020, 16:01
Taldykorgan – Ust-Kamenogorsk highway to be commissioned this year — Askar Mamin
03 September 2020, 15:29
Creation of 20 large medical centers and production of medicines within country — Shoranov on implementation of President's Address
03 September 2020, 15:17
How will mechanism for using pension savings work — Birzhan Nurymbetov speaks on implementation of President's Address
03 September 2020, 15:13
Briefing to be held on measures to implement the Address of the Head of State
03 September 2020, 13:09
Modernizing country's social sphere and improving welfare of citizens — Tugzhanov on main aspects in implementation of President’s Address
02 September 2020, 17:18
Additional payments for classroom guidance and checking exercise books doubled since September 2020 — Aimagambetov
02 September 2020, 17:08
Ministry of Healthcare plans to purchase 100 mobile medical buses for rural settlements
02 September 2020, 16:38
Kazakhstan launches reform of local police service on principle of ‘police within walking distance’
© 2019 - 2020 Press service of the Prime Minister of the Republic of Kazakhstan.
Developed by SoftDeCo.