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 KAZAKHSTAN International Business Magazine №4, 2008
 Kazakhstan’s Fuel and Energy Sector in 2008.Reserves, Production and Investment
Kazakhstan’s Fuel and Energy Sector in 2008.Reserves, Production and Investment
The development of an efficient stimulation system of the national fuel and energy sector to meet the growth of energy consumption are the main factors required in order for the Kazakh economy to become stable. In these terms it is vital to create the most favourable conditions for exploration and the development of prolific fields of hydrocarbons, located in the country’s west and the Kazakh part of the Caspian Sea. This particular region will allow the country to meet the growing demands for energy resources and to increase the oil and energy export in the 21st century.
Kazakhstan occupies eighth position in the world in terms of proven oil reserves. The country is only behind Saudi Arabia, Iran, Iraq, Kuwait, the UAE, Venezuela and Russia. The country accounts for about 3.3% of the world’s total oil reserves and more than 1% of the global gas reserves. Kazakh probable oil reserves are about 13-17 billion tonnes, mostly located in the Kazakh part of the Caspian Sea shelf.
To date, the state registers record 214 oil, 112 gas and 57 condensate fields. Most of them are located in the west of the country.
In terms of distribution of reserves by oil companies, the clear leader is the Agip Kazakhstan North Caspian Operating Company NV (Agip KCO) and Tengizchevroil joint venture, whose combined reserves account for 70% of the country’s total recoverable hydrocarbon reserves. These companies are among 13 major oil enterprises, which are developing a total of 83 fields, or 92% of the country’s recoverable reserves. The remaining 8% of reserves are concentrated in 131 fields, which are being developed by small and medium-sized companies. In general for the sector, the proven reserves are enough for 70 years, whereas this figure is half this for the larger companies.
Between 1996 and 2007, thanks to investment by oil and gas companies the growth of in-place reserves (A+B+C1 categories) totalled 1,445.7 million tonnes of oil and 44.8 billion cu m of gas. Over this period, oil output totalled 484.4 million tonnes and the gas output totalled 168.5 billion cu m. Oil production is almost three times more than in 1996 (more than 60 million tonnes) and gas production is about ten times more (more than 30 billion cu m). The annual output of gas condensate stays at 5-6 million tonnes on the average.
In oil output Kazakhstan occupies second place in the CIS and the 18th position in the world. The country is only behind the Middle East, Russia, Venezuela, China, Norway, Canada, the United Kingdom, Indonesia, Brazil and some African countries. It is important to note that the main hydrocarbons consumers are the USA, Japan, China, Korea, India and European countries (60% of global consumption).
According to forecasts, by 2010 oil output should total 80 million tonnes and gas output 47 billion cu m, and by 2015 they should total 130 million tonnes and 50 billion cu m respectively.
Currently hydrocarbons investments make up 73% of the total mineral resources investment. Some 85% of the total hydrocarbons investment is placed by foreign companies and joint ventures. The total hydrocarbons investment between 1996 and 2007 was $64.7bn, including $10.4bn in geological prospecting. In 2007 the investment increased almost 14 times in comparison with 1996 and totalled $13,010.53m, including $1,757.3m in geological prospecting. According to forecasts, investment worth $13,856.2m will be placed in this sector in 2008, including $1,871.5m in geological prospecting (Chart 1).
While considering distribution of investment by companies, it should be noted that 86% of the total investment of $11,137.6m from $13,010.5m was made by 15 major players in 2007. The leaders were Agip KCO ($3,400.6m), Tengizchevroil ($1,638.5m), CNPC-Aktobemunaigas ($1,095.7m), Karachaganak Petroleum Operating B.V. ($1,068.5m), Mangistaumunaigas ($1,038.5m), Kazmunaigas E&P’s Uzenmunaigas ($714.8m), Karazhanbasmunai ($445.9m), Kazmunaigas E&P’s Embamunaigas ($347.2m), PetroKazakhstan Kumkol Resources ($303.8m), Turgai Petroleum ($270.5m), Buzachi Operating ($198.3m), Zhaikmunai ($167.8m), Kazakhoil-Aktobe ($162.9m), KOR Oil Company ($144.3m) and Karakuduk-Munai ($140.3m).
At present 268 hydrocarbons sites are being developed, including production at 78 sites (29% of the total amount), exploration at 77 sites (29% of the total amount) and production and exploration at 113 sites (42% of the total amount). Hydrocarbons were produced by 172 companies (27 joint ventures, 61 foreign ones and 84 national companies).
As already mentioned, hydrocarbons output is growing every year. More than 60 million tonnes of oil, about 30 billion cu m of gas and 6 million tonnes of gas condensate were extracted in 2007. Twelve major companies accounted for 87% of the total oil production and 88% of gas output. Tengizchevroil often tops this list with 14.5 million tonnes of oil in 2007 (24% of the total oil extracted by major companies) and 5.3 billion cu m of gas (25%). It was followed by Kazmunaigas E&P’s Uzenmunaigas with 6.7 million tonnes of oil (11%) and 0.3 billion cu m of gas (1%); Karachaganak Petroleum Operating B.V. with 5.7 million tonnes of oil (9%) and 14.29 billion cu m of gas (47%); Mangistaumunaigas with 5.7 million tonnes of oil (9%) and 0.5 billion cu m of gas (2%); CNPC-Aktobemunaigas with 5.6 million tonnes of oil (9%) and 2.9 billion cu m of gas (10%) and others (Table 1).
In terms of its reserves, Kazakhstan is also in the top 10 countries in the world, behind the USA, Russia, China, Australia, India, South Africa and Ukraine. The country owns about 3% of the world’s proven coal reserves. Over 60% of probable reserves are concentrated in Kostanai Oblast.
The state registers recorded reserves in 49 deposits that group 197 independent sites, of which 142 are underground mines and 55 are open pits. Most deposits are concentrated in central (the Karaganda and Ekibastuz coal basins, and the Shubarkol deposit) and northern Kazakhstan (the Turgai coal basin). Active reserves make up 45% of the total, inactive 55%.
In terms of reserves, the largest company is Bogatyr Access Komir with over 3 billion tonnes or a third of all coal reserves under development. It is followed by Shubarkol Komir, ArselorMittal Temirtau’s coal department (former Ispat Karmet), the Euroasian Energy Corporation and Maikuben West. The reserves of each of these companies exceed 1 billion tonnes. In general, eight major companies are operating 97% of the total Kazakh coal reserves in 19 sites. Small and medium-sized companies have only 3% of the reserves concentrated in 34 sites. The total reserves in the sector are enough for over 100 years, whereas the reserves developed by major companies only for 70 years.
Between 1996 and 2007, thanks to investment by coal companies the growth of in-place coal reserves (A+B+C1 categories) totalled 211.6 million tonnes, whereas 803.8 million tonnes were recovered over this period. The reserves grew in the Karazhira (East Kazakhstan Oblast) in 1996, in the Ekibastuz basin (Pavlodar Oblast) in 2001, in the Karaungur mine (East Kazakhstan Oblast) and some mines in the Karaganda basin in 2004.
At present 34 companies in the country mine coal (30 national, 3 foreign and one joint venture) in 38 sites, including production at 32 sites and production and exploration at six sites.
Between 1996 and 2007 investment in coal mining totalled $4,069m. By 2007 the annual investment grew 15 times and reached $572.9m. However, only $0.6m (less than 1% of the total investment) was placed in geological prospecting. Investment in coal mining is expected to stand at $610.1m in 2008, including $0.6m in geological prospecting (Chart 2).
Almost the entire volume of investment in 2007 was ensured by 10 major companies, including ArselorMittal Temirtau which invested $242m (42% of the total investment); Bogatyr Access Komir $133.8m (23%); the Euroasian Energy Corporation $64m (11%); Shubarkoil Komir $34.6m (6%) and others (Table 2). Other companies invested only $24.4m or 4% of the total investment.
Compared with 1996, in 2007 Kazakhstan coal output grew by 140% to 93.9 million tonnes. Of this, 13 major companies produced 99%: Bogatyr Access Komir 38.4 million tonnes (41%); the Euroasian Energy Corporation 18.4 million tonnes (20%), and ArselorMittal Temirtau 12.2 million tonnes (13%) and others (Table 3).
Kazakhstan holds about 27% of the world’s total uranium reserves – 1.6 million tonnes, of which over 50% are in-place reserves and 30% are proven reserves (A+B+C1 categories).
The state registers recorded reserves in 57 deposits, 17 of them being developed, concentrating 74% of the total country’s uranium. Other 40 deposits are in the reserve.
Three uranium-producing enterprises – the Inkai joint venture, the Mining Company (owned by Kazatomprom) and the Katco joint venture – have the largest reserves (45% of the total in-place reserves). Major companies' reserves are enough for about 43 years of reserves; the figure for the sector is 53 years.
Between 1996 and 2007, thanks to investment by uranium companies the growth of uranium reserves (A+B+C1+C2 categories) totalled 53,200 tonnes, whereas annual uranium output grew 160 times over this period. In general, the growth of reserves was faster than that of output. Thus in 2007 output was 1.8 times lower than the growth of proven reserves.
Today companies from six countries invest in Kazakh uranium mining industry. The total investment between 1996 and 2007 was $1,652.5m. In 2007 the investment totalled $691.3m, which is 32 times more than in 1996. About $33.9m was invested in geological prospecting, which is 5% of the total investment. This figure is expected to reach $736.2m in 2008, including $36.1m in geological prospecting (Chart 3).
Investment was distributed among the major companies in the following way: the Mining Company $180.3m (26% of the total amount); Inkai $96.3m (14%); Katco $93m (13%), Betpak Dala $77.5m (11%); Kyzylkum $53.6m (8%); Zarechnoye $44.8m (6%) and Appak $36.4m (5%).
Output has been growing every year. Seven of the major companies extracted 100% of the country’s uranium in 2007, including the Mining Company which produced 51% of the country’s amount; Betpak Dala produced 16% of the total amount; Katco – 14%, Karatau – 7%; Stepnogorsk Mining and Chemical Enterprise – 7% and Inkai – 4%.
Perspectives on the fuel and energy sector
The Caspian oil will remain a strategic product for the world market. Long term interest in the Kazakh part of the Caspian Sea is caused by the growing energy demand by leading countries, which often are competitors in geopolitical interests. That is why being the country with the longest shore and largest proven oil reserves in its Caspian   shelf, Kazakhstan has all the chances to become a leading global energy supplier.
The development of the coal mining industry will be closely connected with coal benefication, quality improvement, development of a chemical industry aimed at deeper conversion of coal in order to obtain liquid fuel and synthetic agents. Pyroschist is in high demand now. Methane from the coal mines in the Karaganda basin may be used as and alternative fuel. Its high concentration in coal beds, developed infrastructure and large gas consumers encourage large-scale production and utilisation of the methane. It will increase the energy potential of Central Kazakhstan, and it will provide gas to industrial and energy companies of Karaganda, Ekibastuz and Pavlodar regions as well as the country’s capital Astana.
The perspectives on the uranium sector are associated with hydrogenic deposits. Rhenium, vanadium, selenium, rare earths and other elements may be extracted together with uranium by an in-situ leaching process. In addition to uranium, minerals mined at organogenous phosphate and uranium deposits include scandium, rare earths, and phosphorus; and at carbon and uranium deposits such minerals, as molybdenum, rhenium, cobalt, silver, germanium and selenium. In order to expand the mineral resources industry it is essential to develop new fields, deposits and sites, including supplementary exploration of flanks of the Irkol and Kharasan deposits, as well as exploration within the Irkol-Kharasan area in the Kyzylorda Oblast.  
This survey was prepared by Elvira Jantureyeva, the Head of the Service for Analysing the Results of Mining of the Kazgeoinform National Centre for Geological Information of the Geology and Mining Committee at the Kazakh Energy and Mineral Resources Ministry.

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