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Eurasianet

Eurasianet

EurasiaNet.org provides information and analysis about political, economic, environmental and social developments in the countries of Central Asia and the Caucasus, as well as in…

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Kazakhstan’s Giant Oil Field Set To Open In 2016

Kazakhstan’s Giant Oil Field Set To Open In 2016

As oil prices sink to impressive new lows, Kazakhstan is declaring, once again, that its giant Kashagan field will begin working at the end of 2016.

That was one of a range of hopeful and optimistic forecasts for the energy industry laid out by National Economy Minister Yerbolat Dosayev at a government meeting on December 8.

The ultimate goal is to produce more, export more and eventually refine more.

Related: Russia And Turkey: Teetering On The Brink

If the government’s hopes are met, Kashagan will be able to churn out 13 million tons of oil in 2020.

In April, work will begin on expanding Tengizchevroil, a joint venture between Chevron (50 percent), ExxonMobil (25 percent), Kazakhstan state oil and gas company KazMunaiGaz (25 percent) and Russia’s LukArco (5 percent).

Tengizchevroil develops the Tengiz and Korolev fields, which are estimated to hold up to 1.1 billion tons worth of recoverable crude in total.

Deputy Energy Minister Mazgum Mirzagaliyev said while overall output will drop from 79 million tons to 77 million tons in 2016, the blip is only temporary. With Kashagan online, that figure should rise to 92 million tons by 2020 and then again to 95-96 million tons by 2025.

With those kinds of figure, thoughts have also been devoted to how the oil is to be carried.

Related: Venezuelan Government Losing Grip As Low Oil Prices Take Their Toll

Dosayev set a December 2016 date for the completion to expansion works on the 1,500-kilometer CPC transportation system, which carries oil from western Kazakhstan to the Russian port of Novorossiysk, where the crude is then loaded onto tankers. Once that is done, the pipeline’s annual capacity will increase from 35 million tons to 67 million tons, doubling revenue.

By December 2017, it is expected that construction will be completed on a gas pipeline running from Beineu in the far west, through Bozoi to Shymkent, the third most populated city in the country. The intent behind this construction — dubbed the largest pipeline project in the history of Kazakhstan — is to ensure the gasification of southern regions, which are now reliant on imports for a fuel that the country otherwise has in abundant supply. The pipeline will have an annual throughput capacity of 10 billion cubic meters, provide household gas to about 2 million people and also possibly leave some left over to feed into export routes to China.

Addressing the other part of the energy puzzle, Dosayev said that by the end of 2017, refurbishment and modernization will be finished at oil refinery plants in Atyrau, Shymkent and Pavlodar. That, said Dosayev, would make it possible to meet Kazakhstan’s internal fuel needs.

Kazakhstan has not built any refineries since the collapse of the Soviet Union, leaving it floundering as demand for refined fuel continues to rise against the backdrop of economic growth.

Related: Oil Bust Kills Off 19 Million Barrels Per Day Of Future Oil Production

With energy prices in the doldrums, however, it has become rigorous orthodoxy among Kazakhstan’s officials to talk up the prospects for other sectors of the economy.

“The agrarian sector should become one of the key drivers of future economic growth in Kazakhstan,” Dosayev said. “Throughout 2016, drawing on the experience of Australia and Brazil … the main focus of the development of agriculture will be stimulated by the creation of infrastructure and the integration of new technologies.”

Specific measures mentioned by the Minister included reforms to the existing state of agricultural subsidies, improvement to crop insurance and the introduction of electronic grain receipts — a form of documentation intended to make the sector more efficient and profitable.

By Eurasianet

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