NUR-SULTAN – President Kassym-Jomart Tokayev reiterated Kazakhstan’s commitment to achieving carbon neutrality by 2060 and called for greater efforts to ensure the country’s electricity is generated from more environmentally friendly sources at the meeting that reviewed the country’s gas industry, reports Akorda press service.
Achieving net-zero carbon dioxide emissions, however, will require structural, industrial, and economic changes.
“I am instructing the government to increase the volume of gas generation by one and a half times by 2030, from 21 to 33 billion kilowatt-hours. Gas should occupy at least a quarter of the country’s energy balance. The share of renewable sources of energy must reach 15 percent by then. By the end of this decade, almost half of the country’s electricity will be generated from more environmentally friendly sources,” said Tokayev addressing the senior officials overseeing the sector.
Tokayev said the gas industry is important for the country’s social and economic development.
“Gas consumption in the country is growing every year, but the rate of gas production does not match this growth. New projects are launched to convert industrial facilities to gas. The number of the population consuming blue fuel is growing. Therefore, the demand for gas will only grow and the supply must meet the demand,” said Tokayev.
The industry needs changes
He noted that the industry needs a major upgrade. There is also a need to expand the gas resource base through geological exploration, a priority for the government and the Samruk Kazyna Sovereign Welfare Fund.
Measures should also be taken to improve the investment attractiveness of the sector.
Tokayev also agreed to Samruk Kazyna’s proposal to transfer the rights on subsoil use on new fields to KazTransGas, which will become a national gas company overseeing the entire chain from exploration to sales of final products.
By doing so, the government should be cautious against monopolizing access to gas fields.
“The government should create conditions for independent exploration and development of gas fields by independent investors. If the concept of a vertically integrated gas company is implemented successfully, the government and Samruk-Kazyna should consider holding an IPO of KazTransGas in 2022, including through a public IPO. This will significantly revive the financial market and enable citizens to own part of the country’s gas wealth,” said Tokayev.
Tokayev also spoke about the improvement of pricing on the domestic gas market as one of the priorities.
Ongoing gasification in the regions has led to increased gas consumption. 53 percent of the country has access to gas, but some regions lag behind the gasification schedule.
Over the past five years, the domestic market has grown by 40 percent from 12 to 17 billion cubic meters of gas consumed. But the gas price in Kazakhstan remains one of the lowest among the Commonwealth of Independent States.
“I gave instruction earlier to moderate gas tariffs in the regions and provide the population with affordable gas. We need to step up efforts in this area. We need a new clear and transparent pricing model along with a well-thought-out system to protect socially vulnerable population groups and sectors of the economy sensitive to gas prices. I ask the government to develop suggestions no later than Sept. 1,” said Tokayev.
He also told the government and Samruk Kazyna to tap additional sources of financing, including revenues from exports and, potentially, privatization.
Liquefied petroleum gas production
Over the past three years, the consumption of liquefied petroleum gas has more than doubled.
In the Mangistau Region alone, more than 90 percent of cars use liquified petroleum gas supplied by the Kazakh gas processing plant. The equipment in the plant, however, is 90 percent worn out.
“Emergency shutdowns of the plant can leave the population without motor fuel. (…) I instructed the government and Samruk Kazyna to accelerate work in this area. The new plant must be commissioned no later than 2023,” said Tokayev.
Another supplier of liquified petroleum gas – Atyrau oil refinery – also faced criticism from Tokayev. Despite its modernization in 2018, the enterprise has been working with interruptions causing a decline in oil and liquified gas production. This, according to Tokayev, caused shortages, and prices at gas stations to rise.
Tokayev instructed the government to consider the construction of additional facilities for its production.
Oil and gas sector development
One of the priority directions in oil and gas sector development is the deep processing of hydrocarbons, said Tokayev.
“Talking about the oil and gas chemical industry, as a rule, narrows down to two products – polyethylene and polypropylene. I think we need to expand this list. The market demand is not limited to these materials. Enterprises that process basic products into finished products for industrial and household purposes should be created around the hubs of oil and gas chemical production, which are oriented on the domestic and foreign markets,” said Tokayev.