Overview

Kazakhstan is a major oil producer in Central Asia and a developing gas producer - surrounded by very large gas producers. The BP Statistical Review of World Energy 2014 assessed the country’s proven gas reserves at 1.5 trillion cubic metres. The majority of the gas produced in Kazakhstan is associated with oil, so as oil production rises so does gas output. Much of the gas is re-injected to enhance oil recovery, but Astana has embarked on a gasification programme.

The country produced 16.6 billion cubic metres in 2013, showing a steady increase from 10 bcm in 2003. Demand grew from 7.9 bcm to 10.3 bcm over the same period. Consumption and export of gas is limited by inadequate transport infrastructure. Kazakhstan is in the process of expanding and integrating its pipeline infrastructure, which will reduce its dependence on imports and expand export opportunities.

Kazakhstan started minimal exports of gas to China in July 2013, but only sold 124 million cubic metres (MMcm) to the country that year, according to Chinese customs data. This compares with 11.5 bcm of pipeline gas to Russia and 200 MMcm to other former Soviet Union countries in 2013, according to BP.

Astana is committed to its gasification programme, but the low regulated price of gas in Kazakhstan is little incentive for companies to develop production and infrastructure. Central Asia-focused explorer Tethys Petroleum received about $1.8/MMbtu for domestic gas sales in Kazakhstan in April 2014.

A total of 97% of Kazakhstan’s gas reserves are in the western part of the country - in the provinces of Atyrau, Mangistau, Aktobe and Western Kazakhstan. These four regions are home to the country's largest hydrocarbon fields – including Karachaganak, Kashagan, Tengiz and Zhanazhol – as well as smaller pre-Caspian fields such as the Zhetybai, Tenge and Uzen hydrocarbon groups. These are close to existing pipeline infrastructure and the traditional Russian export route. Kazakhstan's future gas output will predominately come from these hydrocarbon fields.

There are also some commercially attractive gas reserves in the south of the country, including the Amangeldy field in Zhambyl province, and Akshabulak and Kumkol in Kyzylorda province. These have been used to supply gas to the industrial regions in the south.

The gas produced from these associated fields is often sour and needs processing. Kazakhstan needs to expand its processing facilities as the majority of its gas is processed at the Orenburg plant in Russia. The country has also had to tackle hydrocarbon production under complex and harsh climatic conditions, such as the Kashagan field in the Caspian Sea.

The government has been active in attracting IOCs and is keen to use their expertise to maximise production. However, the state oil and gas company Kazmunaigas is expanding its share in the Kazakhstan’s largest fields to ensure the country benefits from these developments.

Page updated: 04/08/2014