Kazakhstan Approves General Gasification Scheme

ASTANA – “The Kazakh government has approved a general scheme for the gasification of the country. This policy document defines economically sound strategic directions to ensure reliable gas supply to consumers,” Minister of Oil and Gas Uzakbai Karabalinsaid on June 24.

The new plan is intended to increase gas production, consumption and transportation, including through building new pipelines, over the next 15 years.

Over the past 20 years, oil production in Kazakhstan has more than tripled and gas production has grown by more than five times. The domestic gas supply, however, is paradoxical. Despite impressive gas reserves, unresolved geographical challenges mean Kazakhstan must purchase gas from its southern neighbours, Uzbekistan and Turkmenistan.

One reason is that all of Kazakhstan’s gas fields are located in the country’s west and northwest regions; secondly, the sheer size of the country and its widely scattered population centres have made the construction of gas transportation infrastructure a long process.

Today, 10 of 16 regions in the country have been gasified, mainly the western and southern regions, including the largest metropolis, Almaty. But the north, centre and east of the country remain without steady supply of natural gas. Meanwhile, over the past five years, gas consumption in the country has been growing steadily and in 2013 was 30 percent higher than it was in 2007.

To resolve the problem with gas supply to the population, the government approved the general scheme for gasification of Kazakhstan in late June.

“The general scheme of gasification defines strategic directions to provide consumers with gas. The legal basis for the development of this document is the Law on gas and gas supply,” said Karabalin, presenting the document to reporters after the meeting of the government on June 24.

Gas production will increase by 2030 to 60 billion cubic metres per year. Significant volumes of produced gas – 25 billion cubic metres – will be used for re-injection to maintain the necessary pressure to extract oil from oil reservoirs, the minister said, which is why production volumes of usable gas will reach 21 billion cubic metres per year by 2030.

“According to the forecast, in 2030, the largest consumers of commercial gas will be industrial enterprises and enterprises in the fuel and energy complex, [at] 31 and 40 percent, respectively. Many of these companies are included in the State Programme of Accelerated Industrial and Innovative Development (SPAIID),” said Karabalin.

The implementation of the gasification scheme will lead to increased consumption of commercial gas in the domestic market, from 11 billion to 18 billion cubic metres, and the number of gasified settlements will almost double, from 988 to 1,621. All this will be possible due to the active construction of new pipelines and the near-doubling of their length, from 28,500 to 57,500 kilometres.

This year, the first phase of the large-scale Beyneu-Bozoi-Shymkent gas pipeline project will be completed. A capacity of 2.5 billion cubic metres per year has already been achieved at the Bozoi-Shymkent section. It is planned to gradually increase the pipeline’s capacity to 10 billion cubic metres. This project will provide gas to the southern, import-dependent regions of Kazakhstan and to more than 500 settlements.

With implementation of the general scheme in Kazakhstan, a total of 13 regions will be gasified by 2030 and the number of consumers of natural gas will increase to 12 million people.

“The necessary investment for the implementation of the General Gasification Scheme 2030 is 656 billion tenge [US$3.57 billion]. In keeping with the legislation, there are three sources of funding: the state budget, the national operator in the name of KazTransGas and private investments,” said the minister.

As for gas production, the main hopes are associated with the large Tengiz and Karachaganak fields. Last fall, the government and Tengizchevroil, the Tengiz field’s operating group comprising Chevron, ExxonMobil, KazMunayGas and LukArco, signed a memorandum on future expansion projects. This is a very important document for the Kazakh economy, which will contribute to the growth of oil production at the project up to 38 million tonnes per year. It will also provide raw materials for the Atyrau oil refinery.

The huge Karachaganak project is being implemented by the companies BG Group, Eni, Chevron, Lukoil and KazMunayGas. In 2013, nearly 12 million tonnes of liquid hydrocarbons and more than 17 billion cubic metres of gas were produced there. Currently, the international consortium of shareholders is considering options for the future expansion of the project, which will also significantly increase gas production at Karachaganak. This process will be completed by 2017 in order to implement the project in 2022.

The development of the gas industry will also boost petrochemical production. Thus, the integrated chemical complex in Atyrau currently under construction will produce 500,000 tonnes of polypropylene and 800,000 tonnes of polyethylene annually.

Kazakhstan is one of the world’s top 12 possessors of proven oil reserves and one of the world’s top 20 possessors of gas reserves. More than 100 domestic and foreign oil and gas companies are involved in the development of oil and gas deposits in the country.

The development of the domestic oil and gas sector today is based on large projects like the Tengiz, Karachaganak and Kashagan field development projects. The reserves of each of these fields exceed 1 billion tonnes in oil equivalent.

“Developing our national oil and gas sector, Kazakhstan strives to meet global trends of the industry. … We intend to continue the development process and the general gasification scheme adopted by the government is one of the steps towards this goal,” concluded Karabalin.

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