Information was prepared by Elvira Djanturaeva, PhD, the Head of Mineral Production Results Analysis, RCGI Kazgeoinform Geology and Subsurface Use Committee under the Republic of Kazakhstan Oil and Gas Ministry.
As is known, our country has extensive resources of crude hydrocarbons which most part is located in the Kazakhstan sector of the Caspian Sea. The guarantee of further attraction of investments in the oil and gas sector of Kazakhstan is the upward trend in the world prices for oil, the existing and planned routes of hydrocarbons transportation to the market of the Southern Europe and Asia, and the participation of major foreign companies in the Kazakhstan oil production projects.
To this date, the reserves of 256 crude hydrocarbon deposits, including 23 oil fields, 58 gas condensate deposits and 202 non-associated or free gas fields, are recorded in the State Reserve Register of Kazakhstan. Our country is one of the world leaders in proven hydrocarbon reserves, coming second only to some countries of the Middle East, Latin America, and to Russia and the USA. The share of Kazakhstan in the world proven hydrocarbon reserves is 3.2% (about 5 billion tons) of oil, and 1.5% (about 2 trillion m3). At the same time, the expected reserves of oil, gas and condensate amounts to 9.3 billion tons, 6 trillion m3 and 1.8 billion tons respectively.
The total new oil reserves added within the period of from 1996 to 2009 is about three times as much as the volume of production for the same period (Charts 1 and 2), while a stable year-on-year gas reserve increment will make it possible to expand the production and downstream operations over the next decades (the oil industry reserves will be sufficient for the period of about 70–80 years). It should be noted that it was the first decade of XXI Century when a giant Kashagan field was discovered in the offshore zone of the Caspian Sea (2002), which resources immediately doubled the country’s reserves. Afterwards, the reserve increments took place in such fields as Korolevskoye, Akshabulak, Alibek Yuzhny, Kenlyk (2004), Karamandybas, Karakuduk (2005), Tolkyn and Chinarevskoye (2006), Alibekmola, Kenlyk and Tengiz (2007–2008), Kyzylkiya, S. Hurzhanov and Aryskum (2009). As concerns the future trends and prospects, it is expected that by 2014 the increment of reserves in the oil and gas fields will amount to about 40 million tons and about 30 billion m3 respectively.
In total, 15 sedimentary basins are identified at the territory of Kazakhstan, however, only 5 of them: Pre-Caspian, South-Mangyshlak, Usturt-Buzashinsky, South-Torgai and Shu-Sarysuisky basins are under commercial production. Within the above basins more than 100 crude hydrocarbons fields are under development, and over 65% of the recoverable oil reserves and more than 70% of non-associated or free gas fields recorded in the State Reserve Register of Kazakhstan are under production.
Commercial oil reserves are mostly concentrated in the 13 major fields (91%), including in the two giant fields such as Tengiz and Kashagan (69%). At the same time, the proven fields are spread over the territory of Kazakhstan nonuniformly. All the major oil fields (together with small and mid-size ones) are located in the west of Kazakhstan, while the most part of the fields located in the south of the country consists of small and mid-size fields. So, the eastern, northern, and central regions of Kazakhstan do not have any hydrocarbon resource potential.
It should be noted that many fields of the southern part of the Pre-Caspian zone as discovered in the 30’s to 40’s of the past century are now in the late stage of their development (mature production fields). The level of their depletion reaches 75.6–98.9%, and such enterprises as Embamunaygas PB (Production Branch) and Uzenmunaygas PB (which activities are of a great social and economic importance for the region) should perform additional exploration works to strengthen and further develop their mineral resources base.
Moreover, over 4% (0.23 billion tons) of the oil reserves in Kazakhstan falls into the category of problematic high-viscosity oil pools, while over 40% thereof contains sulfur-bearing and high-sulphur crude oils, considerably increasing the cost of oil production.
So, for the period from 1996 to the first half of 2010 the volume of investments made in the crude hydrocarbon fields development came to the amount of $104.5 billion, including $14.2 billion used for exploration works (Chart 4).
At the end of 2009 about 86% of the hydrocarbon investments in the crude hydrocarbon fields development were made by the major companies, including such as NCOC (47%), Karachaganak Petroleum Operating B.V. (10%), Uzenmunaygas PB (Production Branch) of EP KazMunayGas JSC (9%), CNPC-Aktobemunaygas JSC (8%), Mangistaumunaygas JSC (7%), Tengizchevroil LLP (4%), Embamunaygas PB of EP KazMunayGaz JSC (3%), Karazhanbasmunay JSC (3%), Mangistaumunaygas JSC (2%), Turgai-Pertoleum JSC (2%), JV Zhaikmunay JSC (2%) and others.
As concerns the first half of 2010, for this period the investments in the crude hydrocarbon fields development amounted to $7,359.2 million, including $503.1 million made in exploration works. At the same time, it is expected that by the end of 2010 the investments in hydrocarbon subsoil use will amount to $17.5 billion, including $1.5 billion in the exploration works.
As mentioned above, the most part of the hydrocarbon reserves in Kazakhstan is concentrated in the western region fields developed by the major oil-and-gas production companies (Chart 5), which share in the total volume of production of oil, gas and condensate is 85% (Table).
The leaders in production for the Atyrau Oblast are such companies as Tengizchevroil LLP (86% and 99% of the Oblast oil and gas output respectively) and JSC Embamunaygas PB of EP KazMunayGas JSC (9% and 1.5% respectively), while for the Atyrau Oblast the leaders in production of oil and gas are such companies as JSC Uzenmunaygas PB (Production Branch) of EP KazMunayGas JSC (34 and 7%), Mangistaumunaygas JSC (31% and 10%), Operating Company “Buzachi Operating LTD” (10% and 2%), Karazhanbasmunay JSC (10% and 0.4%) and Karakuduk-Munay LLP (8% and 3%). Among the major production enterprises of the Aktobe Oblast there are such companies as CNPC-Aktobemunaygas JSC (77% and 89%) and Kazakhoil-Aktobe LLP (12% and 8%), while the dominant position in the West-Kazakhstan Oblast is practically achieved by KPO (95% and 99%). In the Karaganda Oblast the lion's share in the crude hydrocarbons output is achieved by Turgai-Pertoleum JSC (58% and 52%) and PertoKazakhstan Kumkol Resources JSC (24% and 29%).
The carbon subsoil users’ activities have a positive effect on the social and economic development of Kazakhstan. In total, since 1996 the subsoil users have invested the amount of $1,809.8 million in the social sphere and infrastructure for support thereof (meanwhile, in 2009 the investment amount increased by 12 times as against 1996), and the amount of $644 million in the programs of training of Kazakhstan local specialists (27 times increase). For this period the number of the personnel employed under contracts has increased from 30 thousand to about 55 thousand (Chart 6).
The total amount of taxes and other payments to the budget from the subsoil users for the period of 14.5 years has come to $59,424.9 million, including $15,336.2 million of the production tax (MET – Mineral Extraction Tax). Moreover, only in 2009 the total amount of taxes and other payments to the budget increased as against 1996 by 65 times and made up $9,634 million, while the proceeds from MET increased by 82 times to the amount of $2,764.9 million (Chart 7).
It should be noted that previously, in the Soviet times, the state geological study of subsoil resources was financed at the expense of the proceeds from the Mineral Extraction Tax paid by the production companies to the country’s budget in the form of the mineral replacement tax rates. After introduction of the contract subsoil system, the Mineral Extraction Tax was paid in the form of royalty (and after adoption of the new Tax Code in the form of Mineral Extraction or Subsoil Tax). At the same time, as is mentioned above, the amounts of the MET paid to the country’s budget have increased for the given period by over 80 times, while the amount of the budgetary financing of the state geological study of subsoil hydrocarbon resources makes up only 1% of the total MET amount. For example, in 2009 the MET amount paid to the budget was KZT408.9 billion, while the total amount of the funds allocated from the budget for financing of the hydrocarbon exploration works totaled KZT2.4 billion. The limit of the budgeting financing of the exploration works until the end of 2010 amounts to about KZT1.5 billion, including over 80% thereof built into the budget for prospect evaluation survey. At the same time, the paid MET amount shall come to KZT461.3 billion.
For comparison, in Russia the amount allocated for financing of the state geological study of subsoil hydrocarbon resources in the previous year made up RUB8.9 billion (16% less than in 2008), while the amount built into the budget for 2010 is much lower: RUB8.6 billion. However, on conversion to our national currency at the average semiannual exchange rate this amount will make up KZT42.1 billion, that is, by approximately 30 times higher than the amount allocated for the state geological study of subsoil hydrocarbon resources in Kazakhstan. Moreover, it should be noted that the amount of the Russian state budget revenues from the oil and gas sector is much higher than the amount of the Kazakhstan state budget revenues from such a sector.
The amount of the budget allocations was reduced due to the investments made directly by the hydrocarbon subsoil users themselves in the exploration works. However, taking into consideration that the oil and gas reserves increment in our country over the last decade have been reached more or less due to the investments made by the subsoil users who will reimburse their costs and expenses for exploration works from their hydrocarbon output, any new risk investments in the exploration works (in particular of foreign investors) are rather doubtful. In this connection it becomes quite evident that only the state can be interested in a stable replacement of the oil and gas industry reserves. Therefore a considerable increase in the amount of the budget allocations for the state geological study of subsoil hydrocarbon reserves as a strategic resource will be required.
The future of the oil and gas industry of our country is mainly associated with the Kazakhstan sector of the Caspian Sea. The State Program of this sector development as adopted in 2003 covers the whole complex of the stage-wise measures, actions and activities aimed at and connected with solution of a number of tasks and problems of subsoil use, attraction of investments, creation of social programs in the regions, development of the local infrastructure, efficient development of fields subject to minimization of adverse environmental impacts, construction of the oil and gas export transportation routes, etc.
Implementation of the above Program will make it possible to increase the annual oil output at the Caspian Sea to 18 million tons already in 2010, and to 90 million tons by 2015, and beginning from 2015 to reach the level of the total annual oil output of 100 million tons over the next 25 years. The countrywide predicted oil production/ output is as follows: by the end of 2010 and by 2015 about 100 – 110 million tons of oil/ 45–50 billion m3 of gas and about 120–150 million tons of oil /over 60 billion m3 of gas respectively.
Taking into consideration and subject to the existing world disbalance between the levels of oil production and consumption, Kazakhstan has the potentials for and a good opportunity of annually increasing its oil output and, accordingly, the volume of crude hydrocarbon exports to the world markets. This assumption is confirmed by the fact that over the years, as from the time of declaration of the country independence, the share of the exported oil in the total oil output of the country has increased from 61% in 1998 to 92% in the first half of 2010.
At the same time, the increase of the exports should not result in decrease of internal consumption of fuel resources, as the domestic refineries (for example, Pavlodar Oil Refinery and partially Shymkent Oil Refinery), which use the Siberian oil from Russia, can refine our crude oil as well. Moreover, it is necessary to continuously improve the system of administrative control of the national market of oil products. Solution of such problems and tasks will be facilitated by the recently adopted new Law “On Subsoil and Subsoil Use” having combined the previous Law of the same title and the Oil Law which at this stage maximally protects the rights and interests of the state, as the subsoil assets owner, and those of other subsoil users.