Ministry of Energy continues to believe in oil

The Vice Minister of Energy Makhambet Dosmukhambetov during the first day of the international exhibition KIOGE 2017 stated that Kazakhstan plans to increase oil production to 100 million tons per year by 2025, although "the era of traditional hydrocarbons is coming to an end." Mr. Dosmukhambetov noted that the traditional volumes of oil would decrease; Kazakhstan began to look for an alternative.

In particular, the production of petrochemicals is being created, but projects are being slowed down all the time. Now the main work in the sphere of traditional types of energy is carried out at the three leading fields - Kashagan, Karachaganak, and Tengiz, but production at other fields, on the contrary, decreases, the official said. The decrease in production volumes affects the economic development of Aktyubinsk, Mangistau and Kyzylorda regions, the Vice Minister said.

According to the plans of the Ministry of Energy, in 2017 it is planned to produce 28 million tons of oil and 15 billion cubic meters of gas at Tengiz. The expansion project at the field will increase oil production by an additional 12 million tons per year. In the first nine months of 2017, 5.9 million tons of oil and 3.5 billion cubic meters of gas were produced at Kashagan Field, the plan by the end of the year is 8 million tons of oil and 4.5 billion cubic meters of gas. The current production level at Kashagan exceeds 200,000 barrels per day and in the near future can be increased to 450,000 barrels per day.

At Karachaganak in the first nine months of this year, the volume of production amounted to 9.3 million tons of oil and 14 billion cubic meters of gas, the plan before the end of the year - 12 million tons of oil and 18.5 billion cubic meters of gas. Without departing from the old paradigm, Dosmukhambetov noted that Kazakhstan still has to rely on its traditional energy resources, although there are bitumen deposits in the country, but it is not possible to make a transition to the production of shale oil, since this requires colossal costs.

With the current instability in this market, the business does not want to invest money in this sector, the Vice Minister said. "It's very difficult to get away from the old paradigm. For example, we are trying to encourage coal miners to solve somehow the issue of methane utilization, but there is great resistance. Everyone is used to do in the old-fashioned way, it is very difficult to achieve progress here," - the public official said. But, one way or another, there is progress, for example, the oil transportation potential of Kazakhstan is actively developing, Mr. Dosmukhambetov said. According to him, by the end of the year, it is planned to complete the Caspian Pipeline Consortium expansion project, through which the discharge capacity will be increased from the current 28.2 million tons of oil to 67 million tons per year, in Kazakhstan it will be to 52.5 million tons. On the Kenkiyak-Atyrau pipeline in the eastern direction, the capacity will be increased to four million tons of oil per year from 2019. This will ensure that the Pavlodar and Shymkent oil refineries are loaded with oil from the western regions and ensure a uniform load on subsoil users to supply oil to the domestic market, the Vice Minister said. An urgent issue in the light of current fuel problems in Kazakhstan. The peak of interest in oil is still ahead. At the same time, the official seemed to have a dichotomy, on the one hand, he said that there was no need to hope for oil; on the other hand, he assured that the peak of interest in oil in the world would be for 2030, to which Kazakhstan should be ready. He proposed mainly to increase production at the expense of three large companies - Tengizchevroil (TCO), Karachaganak Petroleum Operating (KPO) and the North Caspian Consortium (NCOC). The representative of the Ministry of Energy noted that since 1993, the investment volume in TCO alone was $ 34 billion, the company paid taxes to the state in the amount of $ 83 billion. More than three billion barrels of crude oil were produced, 6.8 million tons of oil was already produced at the NCOC. Now the project for expanding Kashagan has begun, which will increase oil production in 2024-2030, - the Vice Minister said. In particular, already in 2025, Kazakhstan has Napoleonic plans to increase oil production to 100 million tons per year, and gas to 60 billion cubic meters. It should be noted that according to the plan for 2017, the republic plans to produce 81 million tons of oil and gas condensate this year. In 2016, the country produced 78 million tons.

Meanwhile, in January-August 2017, Kazakhstan produced 48.001 million tons of oil, which is 12.2% more than in the same period in 2016. The gas situation looks like this: according to previously announced plans of the Minister of Energy Kanat Bozumbayev, in 2017 it is expected to produce up to 48.1 billion cubic meters of gas. Nurtas Shmanov, Senior Vice-President for Oil and Gas Transportation at the KazMunayGas National Company supported Mr. Dosmukhambetov in increasing gas production.

He has focused more on the prospect of expanding TCO. He is convinced that this is the most promising oil direction, together with the Kashagan expansion project. The development of existing fields is also important, - Mr. Shmanov said, as these will create jobs and reduce social tensions in society. "In the short term, the oil and gas paradigm will not be broken, it is clear to everyone; therefore the oil and gas sector is extremely important for Kazakhstan, despite the need for diversification.

Now when oil prices are low, the KazMunayGas 's responsibility to keep financial stability in the country is growing," - Mr. Shmanov said. Belief in the best. On the question of what will happen to all the grandiose plans to increase oil production, if by 2025 the traditional energy sources are finally won by shale oil, the experts did not give a clear answer, as well as on the question of whether the risks of investing in an increased production of traditional oil and gas against the backdrop of a new reality on the hydrocarbon market.

But, judging by the optimistic calculations of officials from the Ministry of Energy, the negative scenario is not considered a priority. Mr. Shmanov, for example, encouraged the exhibitors with some encouraging figures. So, according to him, the gas utilization efficiency level in Kazakhstan has already reached 86%, and just this week the republic has begun exporting gas to China, up to the end of the year it will deliver up to 10 million tons of fuel to the Celestial Empire. Negotiations have begun with Rosneft to increase transit volumes. Representatives of the European Union who were present at the exhibition did not hide their interest in Kazakhstani oil and gas.

The Head of the EU Delegation to Kazakhstan Traian Laurentiu Hristea, noting the prospects for developing alternative energy sources and the efforts of the European community in this direction, was nevertheless forced to state that for the time being it is impossible to do without traditional sources. Therefore, the EU's interest in Kazakhstan will not weaken; he has reassured the Kazakhstan officials. Mr. Hristea noted that 70% of Kazakhstan's oil exports fall on EU countries. "Back in the 1990s, the EU began to depend heavily on oil and gas imports, and this dependence is only increasing. The EU is now extremely interested in the Kashagan project.

A serious increase in volumes at the Kashagan Field can turn Kazakhstan into one of the largest oil suppliers in the world. We are interested in the completion of the deal on acquisition of Romanian subsidiary of KazMunaiGaz by China, after which the processing volume could grow to five million tons per year. In addition, through the port of Constance, there will be a bridge for the delivery of energy hydrocarbons from Central Asia to Europe," the representative of the European Union said. It should be noted that this year representatives of 25 countries and more than 250 companies take part in the exhibition.

Askar Muminov

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