Chinese Company Plans to Construct New Oil Refinery in Mangistau

The Chinese company CITIC, which recently launched the first bitumen plant in Mangistau, is planning to finance the construction of a new oil refinery in the region, according to tengrinews.kz. The report was confirmed during the official visit in March of the Kazakh delegation, headed by Prime Minister Karim Massimov, to Beijing, China.

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Despite the apparent shortage of domestically-produced petroleum products on the market, the Kazakh government chose not to build another refinery, proposing instead the expansion of an existing Shymkent-based oil plant. Built in 1985, the plant is the newest refinery that provides 30 percent of all oil products produced in the country. The decision was made because of the absence of the necessary investment needed for the construction of a new refinery.

The Chinese project is cheaper, however, and will be financed by the country’s Exim Bank. According to Mangistau region Deputy Akim (Governor) Rakhimbek Amirzhanov, the project was first presented during the Third Kazakhstan-Chinese Forum organised in January. The capacity of the new refinery is expected to reach six million tonnes of oil per year, the cost of the project is anticipated to be about $5-$6 billion and construction should be finished in five years.

At the moment, Kazakhstan imports 1.8 million tonnes (30 percent) of oil products from other countries. This problem was caused decades ago, when Soviet Kazakhstan-based refineries were dependent on oil imports from Western Siberia fields located in Russia. In the current market conditions, this situation leads to under-loaded Kazakh refinery feedstock. In the early 1990s, domestic refineries processed about 17 million tonnes of oil, 80 percent of which were imported from Russia. In recent years, the total volume of processed oil has decreased by three times,” explained Amirzhanov.

He also mentioned the 2014 annual address of Kazakh President Nursultan Nazarbayev, who noted the country needs large amounts of gasoline, diesel fuel and jet fuel. According to the President, it is nonsense that an oil-producing state does not have enough refineries.

Usually, the optimal location for the refinery is either near markets, which are in the Southern, Northern and Central Kazakhstan regions, or near oil fields, which are located in the western part of the country. According to the joint marketing analysis conducted by the Akimat of Mangistau region and Chinese oil companies, Mangistau was pointed out as the best location for the fourth refinery. This is due to the presence of raw materials, as the volume of oil production in the region amounted to 18 million tonnes during the past year, and the presence of the Aktau port logistics capabilities with the ability to handle up to 12 million tonnes of oil per year,” concluded Amirzhanov.

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