CAPITAL: ASTANA
MONETARY UNIT: TENGE
REFINING CAPACITY: 427,093 B/CD
OIL PRODUCTION: 627,000 B/D
OIL RESERVES: 5.417 BILLION BBL
GAS RESERVES: 65 TCF
Kazakhstan is a former Soviet republic with an area almost four times the size of Texas.
Coal provided more than half of the republic's primary energy in 1991-98, but Kazakh coal production declined by roughly a third in 1999 because of declining exports and other reasons.
Oil production in 2000 was rising. The government said overall production potential exceeded 3 million b/d. Achieving this level was expected to take more than a decade—if it ever could be reached at all.
Gas shipments were more constrained by lack of pipeline capacity than was oil transport, and about 40% of the country's gas reserves were in one field, Karachaganak.
Kazakhstan had to either negotiate to connect its fields to existing Russian pipelines or build its own pipelines. Large volumes were being flared.
The country had six gas pipelines divided into two networks in the west and southeast. The government had considered building a pipeline from the western producing fields to population centers in southeast Kazakhstan. Upstream developments
Kazakhstan's government expected crude and condensate production to increase for several years. More than half of the crude and condensate the country produced in 2000 was exported.
At end-2000 production was failing to meet its 2000 forecast of 660,000 b/d but nevertheless was rising. Its forecasts were for 750,000 b/d in 2001 and 830,000 b/d in 2002.
Most of the growth was to come from Tengiz and Karachaganak fields and start-ups such as North Buzachi, Sazankurak, Saztobe, Airankol, and others. Also, Alibekmola, Urikhtau, and Kozhasay fields were to be producing by 2002.
With all Kazakh production coming from onshore fields, the nine-company Offshore Kazakhstan International Oil Co. made the country's first discovery in the Caspian Sea. Kashagan East 1, 47 miles southeast of Atyrau, was the first find on the Kazakhstan shelf.
OKIOC spudded a well on the Kashagan West 25 miles distant. Kashagan East 1 cut an oil-bearing interval in Paleozoic carbonates below 13,000 ft. The group was to test two zones but announced only results from the lower zone. It flowed as much as 3,700 b/d of 42-44° gravity oil and 7 MMcfd of gas. Results of the second zone to be tested were not announced by late in the year.
The world's only arctic-class barge rig, Sunkar Rig 257, owned by Parker Drilling Co., Tulsa, Okla., drilled the well in 10 ft of water. The PSA covers almost 1.4 million acres.
Supergiant Tengiz field east of the Caspian was averaging 275,000 b/d of oil, and supergiant Karachaganak gas-condensate field was averaging 50,000 b/d of condensate in fall 2000. Together the fields produced about half of Kazakhstan's crude and condensate.
Karachaganak, near the Russian border west of Orenburg and operated by a BG PLC group, was also making 250 MMcfd of gas. The group let contracts to Baker Hughes Inc., Saipem SPA, and Parker Drilling Co. to manage and conduct development, drilling, and workover operations there.
First International Oil Corp., Houston, was the largest interest holder in the Precaspian basin with 9 million acres. FIOC began exporting crude from its first field, Sazankurak, in April 1999. Its exports from this area of the Precaspian basin reached 4,000 b/d in mid-2000 and were to rise to 6,000 b/d by yearend 2000 with further development drilling.
With nearly full interests in five blocks, the company had a close strategic alliance with Geotex JSC, Kazakhstan's main geophysical services company.
A joint venture led by Hurricane Hydrocarbons Ltd., Calgary, averaged 90,000 b/d in fall 2000 from the Kumkol fields in the South Turgay basin. It expected to have averaged more than 80,000 b/d for all of 2000. The company drilled a dry wildcat at Kumkol East, and the board authorized management to proceed with development of Qyzylkiya, Aryskum, and Maibulak (QAM) fields. The fields had 22 wells capable of production but were not producing.
Hurricane also participated with RWE-DEA AG, Gaz de France, and International Finance Corp. in Akshabulak oil field, which it said averaged 6,000 b/d in 1999. The group, known as Kazgermunai, also had rights to Nurali and Aksai fields.
Kazakh state natural gas pipeline operator KazTransGas has won a tender to develop the Amangeldy gas fields in Zhambyl oblast. The $120 million project was to tap 25 bcm of reserves and reduce southern Kazakhstan's dependence on gas from Uzbekistan. Demand was about 1.5 bcm/year.
Late in the year American International Petroleum Corp., New York, reentered and was to evaluate oil potential in an untested Jurassic zone in the Begesh 1 well on a 12,000 acre structure on 4.7 million acre License 953 in southwestern Kazakhstan. The Upper Jurassic was untested in this well and known to be productive in nearby Karakuduk oil field.
Trio Gold Corp., Calgary, was attempting to rejuvenate and explore Blinovskoe oil field on a 59,697 sq km property in the Kyzyl-Orda region. Processing activity
Kazakhstan has three refineries with combined capacity of 427,000 b/d. While this is far below the country's oil production, domestic consumption fell to 130,000 b/d in 1999 from 430,000 b/d in 1990.
Plans were announced for two new refineries in Kazakhstan: a $1.5 billion, 150,000 b/d plant in Mangistau and a $480 million, 50,000 b/d export refinery at Zhanazhol field near Atyubinsk. Based on 2000 utilization and expected growth, however, investment support was considered questionable.
The Pavlodar refinery in northeast Kazakhstan and the Shymkent or SHNOS refinery in south-central Kazakhstan can process 163,000 b/d and 160,000 b/d, respectively. They were built to process crudes from western Siberia, delivered via the Omsk-Pavlodar-Shymkent-Chardzou pipeline.
Atyrau in western Kazakhstan has the country's oldest refinery. Close to the Caspian Sea, with capacity of 104,000 b/d, it was the country's only refinery designed to use local crudes.
Russia supplied only 14,400 b/d of oil to Kazakhstan in 1999-2000. As a result Pavlodar, the most complex of the three plants with catalytic cracking, thermal, and coking capability, ran at 9% of design capacity.
Pavlodar was crippled by competition from Russia's Omsk refinery (part of Russian integrated company Sibneft) 350 km to the north. Deliveries of crude to Pavlodar plummeted after the Omsk refinery expanded its capacity to 600,000 b/d.
SHNOS was designed to process western Siberian oil as 80% of its feedstock. In 2000 it relied largely on oil from Kumkol and other Kazakh fields in the South Turgay basin operated by Hurricane and Russia's Lukoil. It also had access to rail crude deliveries from Uzbekistan and from the China National Petroleum Co.'s Aktyubinsk fields in the west.
SHNOS processed 68,000 b/d of oil (42% of design capacity) in 1999. In 2000 it was adding a catalytic cracking complex, which would increase its output of light oil products from 65% to 85% of its output slate.
SHNOS supplied about 65% of the refined products used in the country's southern regions. In 1999, the refinery produced diesel, gasoline, kerosine, and fuel oil. Close to 50% of output was consumed in Almaty.
The Atyrau refinery was in a paradox. Oil extraction in the western part of Kazakhstan was rising, but refinery output was declining. Atyrau processed 54,000 b/d of crude, or 52% of capacity in 1998 and only 38,000 b/d in 1999.
Built in 1945, Atyrau is the simplest of the country's three refineries. It takes crude from Mangyshlak, Tengiz, and Martyshin fields.
The refinery needed $450 million in investments to obtain a catalytic cracker, which would allow it to process 90,000 b/d. Japanese banks were prepared to finance the upgrade, which Marubeni would undertake. The refinery revamp would boost the production of light products to 80% of capacity.
Atyrau produced 76 and 93 octane gasolines, diesel, heating oil, aviation kerosine, and fuel oil. Transportation
The government set up an interdepartmental commission for matters of export oil and gas pipelines to be headed by Prime Minister Kasymzhomart Tokayev.
The Caspian Pipeline Consortium performed final welding in late November 2000 of its 1,580-km oil pipeline from Tengiz field to Novorrossiysk on the Black Sea. Ahead-of-schedule completion kept the $2.5 billion project on track for start-up in mid-2001. Export capacity was to be 600,000 b/d initially and 1.5 million b/d ultimately.
Chevron called the line "a major step forward in the development of Russia's and Kazakhstan's oil reserves." It would carry crude from Tengiz and other Russian and Kazakhstan fields.
The Kazakhstan government tapped TotalFinaElf SA to study feasibility of a Kazakh-Turkmen-Iran oil pipeline that would run from Kashagan oil field in the Caspian through Turkmenistan to Neka, Iran. The line would carry 500,000 b/d initially and 1 million b/d eventually to refineries in northern Iran.
The Ministry for Energy, Industry, and Trade let a $600,000 contract to Gustavson Associates Inc., Boulder, Colo., to find ways to utilize the country's plentiful natural gas resources.
The ministry noted that its "Soviet-vintage" pipeline network was ill-equipped to fuel anticipated growth in Kazakhstan.
It said Gustavson would investigate gas production forecasts from Kazakhstan's known fields and the potential for discoveries. It also would look at domestic demand for gas from the country's electricity, chemical, and other primary industries. The study would also focus on
Kazakhstan's industrial sectors, particularly chromium and aluminum.
Source: http://www.pennwellpetroleumgroup.com/articles/ipe_print_toc.cfm?volume_num=2001
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