Development of giant fields is key to growth in oil production in Kazakhstan, EIA says
Baku, Azerbaijan, Jan. 15
By Elena Kosolapova - Trend: The key to continued growth in liquids production in Kazakhstan will be the development of its giant Tengiz, Karachaganak, and Kashagan fields, U.S. Energy Information Administration's (EIA) Country Analysis Brief report on Kazakhstan, published on Jan. 14 said.
"Kazakhstan's future as a producer of petroleum liquids depends on the development and expansion of its three largest projects: Karachaganak, Kashagan, and Tengiz," the report said.
Kazakhstan's two largest projects, Tengiz and Karachaganak, accounted for 48 percent of the country's production in the first nine months of 2014, according to data published by Energy Intelligence, EIA said. A third large project, Kashagan, is due to start production in 2016 or 2017, with the combined output of all three projects likely to account for more than half of Kazakhstan's total production going forward. Additionally, both Tengiz and Karachaganak consortia have discussed expansion plans that could result in increased production from these two fields within the next few years.
The Tengiz partners were due to make a final investment decision by the end of 2014 on the Future Growth Project, but by early January, no decision had been announced. The Karachagank Expansion Project is at a less-advanced stage of planning. Both expansion projects will focus on increasing handling and reinjection of natural gas to increase production and ultimate recovery levels of petroleum liquids. However, continued negotiations with the government on terms and lower global crude oil prices could delay decisions on these projects.
The country's estimated total petroleum and other liquids production was 1.70 million barrels per day in 2014, EIA said.
Development of additional export capacity will also be necessary for production growth, according to EIA.
"Kazakhstan is landlocked and is far from international oil markets. The lack of access to the open ocean makes the country dependent mainly on pipelines to transport its hydrocarbons to world markets," the report said. "The rapid growth of oil production and exports will require an expansion of export capacity."
Kazakhstan is also a transit country for natural gas pipeline exports from Turkmenistan and Uzbekistan.
Kazakhstan is an exporter of light, sweet crude oil. In 2013, Kazakhstan exported nearly 1.4 million barrels per day of crude oil and condensate, according to the Global Trade Information Service, EIA said. More than three-quarters of Kazakhstan's crude exports travel around or across the Caspian Sea headed to European markets. An additional 16 percent of Kazakhstan's crude exports head east via a pipeline to China.
Kazakhstan had crude oil distillation capacity of 345,093 barrels per day, as of January 1, 2014, according to the Oil & Gas Journal, EIA said. In 2013, all the three Kazakh refineries met approximately 70 percent of Kazakhstan's gasoline and diesel demand, with most of the remaining demand met by imports from Russia. Upgrading projects were underway in 2014 at all three refineries. The upgrades will allow the three plants to produce fewer heavy products and more high-quality transportation fuels, according to EIA.
"With these upgrades and expansions, Kazakhstan aims to meet all domestic demand for gasoline and diesel production by 2017," the report said.
EIA noted that According to the Oil & Gas Journal, Kazakhstan had proved crude oil reserves of 30 billion barrels as of January 2014-the second largest endowment in Eurasia after Russia, and the twelfth largest in the world, just behind the United States.
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