Oil & gas sector in Kazakhstan
Kazakhstan is one of those few countries in the world that possesses all types of energy resources.
Now Kazakhstan is waiting for the start-up of giant oil & gas project – Kashagan. The second phase, Full Field Development is in progress. Commercial production to commence before September 2013. North Caspian Operating Company (NCOC – www.ncoc.kz), the operator of Kashagan, estimates the recoverable oil reserves of Kashagan at 11 billion barrels and the total in-place oil at 35 billion barrels.
Recent estimates indicate Kazakhstan’s oil and gas reserves are estimated at 5.3 billion tonnes and about 3.3 trillion m3. Therefore in terms of reserves Kazakhstan is among top ten countries in the world.
Over the last 20 years the oil production has grown by four times and of gas – five times. By 2020 the annual oil production is expected to increase up to 130 million tonnes and gas- up to 90 billion cubic metres.
Two western regions – Atyrau and Mangistau are the main oil producing areas. They currently account for more than 70 percent of the total oil extracted in country. The other three extracting regions, Aktyubinsk, Kzylorda and Zapadno-Kazakhstanskaya, account for the remainder.
In 2012 Kazakhstan produced 79.2 million tonnes of oil and gas condensate. The plan for 2013 is 82 million tonnes (83 million tonnes in 2014 and 90 million tonnes in 2015).
Companies representing more than 45 countries including UK, US, France, Italy, Netherlands, Japan, China, Russia, and others are investing in Kazakhstan.
There are lots of ongoing and forthcoming projects in Kazakhstan. One of the largest – Tengiz (Chevron, ExxonMobil, LukArco, KazMunaiGas (KMG) www.tengizchevroil.com
To expand extraction capacity Tengizchevroil has started implementation of a new large-scale project, Future Growth Project (FGP). FEED phase more than 50% complete. Final Investment decision to be achieved later in 2013.
Kazakhstan’s oil and gas industry offers a wide range of opportunities to qualified UK companies which also meet local content requirements. The oil, petrochemical and chemical industries and equipment manufacturing, in particular, look promising.
The Caspian Sea environment is ecologically rich and extremely sensitive, especially because the Caspian Sea is land-locked. Consequently, Kazakh legislation towards the environment is very strict and that creates opportunities for UK companies used to working in the highly regulated North Sea. Regulations permit no dumping and zero-discharges offshore and no gas flaring.
Opportunities include amongst other things:
Solid and liquid waste treatment and disposal
Oil spill response and treatment
Despite state’s and subsoil users’ efforts Kazakhstan is still lacking a skilled technical staff experienced in the oil and gas industry. To an extent, there is not so much a shortage of labour per se, but a substantial mismatch of industry and geography. There are large pockets of skilled labour around the former Soviet industrial areas within Kazakhstan, especially in areas in the east of the country, a time zone distant that could be re-trained. The operators and contracting companies are recruiting labour from these areas to work in West Kazakhstan.
There are good opportunities for international training providers in this field.
English language training by native speakers is in a big demand too.
Getting into the market
Kazakhstan is an open market. Foreign enterprises established here are treated the same as indigenous companies, in such areas as taxation. However, there are certainly challenges: a lack of transparency, considerable bureaucracy, and corruption.
There are good business opportunities in Kazakhstan, in the west in particular due to both upstream and downstream developments.
Main ways of getting into the market is to work through
a partnership with local company to meet increasing local content requirements
Kazakhstan is a mixture of European, Asian and Soviet customs.
The understanding and use of English is growing but Kazakhstan is way behind some other areas of the world.
In Kazakhstan strong personal relationships are critical to business success. Face-to-face business meetings are vital to establish successful business relationships.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.
Kazakhstan International Oil & Gas Exhibition and Conference (KIOGE 2013)
October 1-4, 2013
Mangystau Oil, Gas & Infrastructure 2013
November 5-7, 2013