The economic development of independent Kazakhstan was a success story up to 2014, mainly thanks to its immense oil reserves. The globally falling oil price combined with structural problems has increasingly led to economic problems that the government is trying to counter with infrastructure and austerity programs.
According to estatelearning, most important for Kazakhstan’s economy are still the extraction and export of oil and (to a lesser extent) natural gas. Kazakhstan, with proven deposits of 30 billion barrels, is one of the 20 largest hydrocarbon producers in the world and new deposits are constantly being reported. The information about the suspected and proven occurrences vary considerably. The figures from the BP Statistical Review of World Energy are considered reliable. According to official Kazakhstan data, 26% of the state’s revenue comes from this area, which also accounts for more than 50% of exports. According to official figures, Kazakhstan produced 90.3 million t of oil (and gas condensate) and 55.5 billion m³ of gas in 2018.
The currently largest oil production sites are:
– the Tengis oil field, operated by Tengizchevroil, on the north coast of the Caspian Sea, data on the oil reserves fluctuate between 6-9 billion barrels, according to own data the production is positive;
– Karachaganak, operated by Karachaganak Petroleum Operating (KPO), on the border with Russia near the city of Urals, (1,236 million barrels, also natural gas);
– Uzen in the Mangystau area, in operation since 1965, with proven reserves of 1.5 billion barrels, the end of which is already in sight. The operator is KazMunaiGaz;
– Kumkol (Kyzylorda region), operated by the Canadian PetroKazakhstan since 2008, with proven reserves of 300 million barrels, the end of which is apparently already in sight.
End of October 2016 was able to overcome many obstacles, finally, the promotion of the Kashagan start field until April 2017 were more than 2 million tonnes of oil produced. The start of production at this largest oil field (9-16 billion barrels) outside the Middle East, discovered a few years ago in the northeastern Caspian Sea, had to be postponed several years due to particularly difficult natural and technical conditions and then shortly after the official start on September 10, 2013 be interrupted again due to leaks in the pipeline between the production site and the mainland. The economic consequences have been considerable: the project costs have more than doubled and Kazakhstan lost significant revenue. In addition, the falling oil price since 2014 put the project’s profitability into question. These problems repeatedly led to considerable tensions between the companies involved in the project and changes in shareholders. The state-owned company KazMunaiGaz and the sovereign wealth fund Samruk-Kazyna are currently involved on the Kazakh side, and large Western oil companies – Agip, Exxon Mobil, Royal Dutch Shell, Total, Inpex – and, since summer 2013, the Chinese CNPC, all of which are in the North Caspian Operating Company). The dispute among those involved continues even after funding has started. Environmentalists are critical of the project.
The current economic crisis, triggered among other things by the low global oil price, will presumably lead to changes in the corporate structure of Kazakhstan’s oil industry. Strikes and the inadequate regulatory mechanisms for the relationship between employers and employees in Kazakhstan pose a threat to production and internal peace. Kazakhstan, which is not an OPEC member, does not stick to the December 2016 among most oil producers States in support of the world price negotiated production restrictions. Absurdly, Kazakhstan has to import gasoline and diesel on a large scale due to the lack of capacity of its refineries, and it even happens.
As in its foreign policy, Kazakhstan is following a multi-vector approach when building the pipelines necessary for the transport / export of oil. CPC (Caspian Pipeline Consortium) has been connecting western Kazakhstan with the Russian port of Novorossiysk since 2001; the Atyrau-Samara pipeline creates a connection to the Volga, thus opening the way to Eastern Europe and the Black Sea ports. The Kazakhstan-China pipeline runs in exactly the opposite direction. However, one tries not to become too dependent on China. So oil is shipped in the Kaspi port of Aktau. In autumn 2016, the construction of a new underwater pipeline through the Caspian Sea to Azerbaijan was discussed.
Although the motto of EXPO-2017 in Astana was “Green Economy” and there is constant talk about alternative energy sources, they have so far only been poorly developed in Kazakhstan.
The explored gas reserves are said to be 1.9 trillion m³, the hopes are at up to 8 trillion. The largest mined deposits are in Karachaganak. Although there are several pipeline projects (to Russia, China and the Caucasus), it can be assumed that the bulk of the gas reserves will be needed in the longer term for domestic needs.