Kazakhstan energy profile

Energy security

Resource endowment
Resource endowment

At the end of 2018, Kazakhstan’s proved oil reserves were 3 900 Mt and the reserves-to-production (R/P) ratio was 42.7 (https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf); this amounts to 1.7% of the world’s total liquid reserves and puts Kazakhstan in 12th place worldwide (https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf).

Kazakhstan is also rich in natural gas deposits, with 1 000 bcm of proved reserves at the end of 2018 (0.5% of total world reserves) at an R/P ratio of 40.7, and proven reserves of coal totalled 25 605 Mt (2.4% of total world reserves) at an R/P ratio of 217 (https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf).

There are 271 oil and 61 gas condensate fields in Kazakhstan. More than 90% of oil reserves are concentrated in 15 major fields, and about 70% of the country’s proved and probable (2P) oil and gas condensate reserves are found in the five largest fields (Tengiz, Kashagan, Korolevskoye, Karachaganak and Zhanazhol).

Approximately 98% of Kazakhstan's natural gas reserves are located in the west, with 85% concentrated in just a few large fields (Tengiz, Kashagan, Karachaganak, Zhanazhol and Imashevskoye). 

At the end of 2018, Kazakhstan’s proved oil reserves were 3 900 Mt and the reserves-to-production (R/P) ratio was 42.7 (https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf); this amounts to 1.7% of the world’s total liquid reserves and puts Kazakhstan in 12th place worldwide (https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf).

Kazakhstan is also rich in natural gas deposits, with 1 000 bcm of proved reserves at the end of 2018 (0.5% of total world reserves) at an R/P ratio of 40.7, and proven reserves of coal totalled 25 605 Mt (2.4% of total world reserves) at an R/P ratio of 217 (https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf).

There are 271 oil and 61 gas condensate fields in Kazakhstan. More than 90% of oil reserves are concentrated in 15 major fields, and about 70% of the country’s proved and probable (2P) oil and gas condensate reserves are found in the five largest fields (Tengiz, Kashagan, Korolevskoye, Karachaganak and Zhanazhol).

Approximately 98% of Kazakhstan's natural gas reserves are located in the west, with 85% concentrated in just a few large fields (Tengiz, Kashagan, Karachaganak, Zhanazhol and Imashevskoye). 

Energy security and diversification
Energy security and diversification

Highly reliant on its significant fossil fuel resources, Kazakhstan is a net exporter of energy and energy products. However, some residents – in northern and central Kazakhstan – still do not have access to network gas because natural gas reserves are in the western part of the country, population centres are in the north, east and south, and the domestic pipeline system is underdeveloped. Kazakhstan therefore relies on gas imports from Russia and Uzbekistan to meet domestic demand: a gas-swapping arrangement between Kazakhstan and Russia entails the replacement of Karachaganak gas, which has historically been supplied to Orenburg for processing, with imports of Central Asian gas to the southern part of Kazakhstan and Russian gas to the Kostanay region (https://www.kmgep.kz/eng/investor_relations/annual_reports/).

Activities are, however, under way to expand networks to increase overall access to gas. Following an order of the former president in 2018, construction of the Saryarka gas pipeline was begun to provide gas to the capital city of Nur-Sultan as well as central and northern Kazakhstan by 2023. Pipeline construction began in November 2018, and in October 2019 the first stage from Kyzylorda to Nur-Sultan was completed (https://ru.sputniknews.kz/economy/20191129/12161758/Vtoraya-ochered-gazoprovoda-Saryarka-otsenivaetsya-v-124-milliona-dollarov.html).

The pipeline’s capacity will be 2.2 bcm of gas per year, and 171 settlements in the Karaganda and Akmola regions are expected to be provided with gas. These measures should improve the air quality of Nur-Sultan, as coal consumption is expected to decrease by 650 kt per year (https://inbusiness.kz/ru/last/stalo-izvestno-v-kakie-rajony-stolicy-v-pervuyu-ochered-provedut-gaz). In April 2020, installation of the main gas pipeline was being completed at Nur-Sultan (https://informburo.kz/novosti/v-nur-sultane-montazh-magistralnogo-gazoprovoda-nahoditsya-na-stadii-zaversheniya.html).

Strong economic growth and a rising standard of living are expected to boost energy demand considerably in upcoming years. To meet this rising demand in a reliable, affordable and sustainable manner, the government plans to expand generation capacity from various fuel sources through new investments and modernisation of existing capacity. However, construction of a 2 640‑megawatt (MW) coal-fired power plant at Balkhash Lake was suspended in 2016 because the Ministry of Energy decided that modernisation of power plants to date, the creation of substantial reserves and a decline in energy consumption growth render this plant unnecessary before 2022 (http://ratel.kz/kaz/v_kazahstane_ne_budet_elektrostantsii_samsung).

According to Kazenergy’s 2015 report, the availability of low-cost coal means the established fleet of large coal-fired power plants will continue to dominate until 2040, although gas-fired generation will also increase as Kazakhstan’s gas network expands. Kazenergy expects only modest growth in renewable energy production due to its intermittent nature and the technical and economic issues of integrating renewables into Kazakhstan’s unified energy system, unless there are significant changes in technical reliability in either renewables production (wind and solar in particular) or in grid operations (http://kazenergy.com/images/NationalReport15_English.pdf).

Low liquefied petroleum gas (LPG) prices have raised demand for the product. The LPG market is regulated, with the government setting a price limit on LPG every quarter, but there has been a deficit of LPG in the domestic market due to illegal exports to neighbouring countries where the price is much higher. Because low maximum wholesale prices and increased consumption in the domestic market have led to losses and deteriorating financial and economic conditions for the owners and producers of LPG, the Ministry of Energy had planned to phase out state regulation of wholesale prices (http://energo.gov.kz/index.php?id=49), but in 2019 regulation was still in place with the Minister of Energy approving a maximum LPG price (https://www.zakon.kz/4986539-predelnye-tseny-na-szhizhennyy-gaz.html).

Modernisation of the three refineries, completed in 2018, has helped reduce the need to import light crude oil products. Refinery throughput increased 10% in 2018 to 16.4 Mt, providing 93% of the domestic market’s gasoline supplies, 91% of its diesel and 62% of its jet kerosene (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf). New refinery capacities are expected to completely meet domestic needs by 2030.

Energy co‑operation between Kazakhstan and China is based mainly on China’s need to import energy for development and to diversify its import sources, and on Kazakhstan’s aim to diversity its export routes and expand export volumes. China is a key strategic energy sector partner, with Chinese companies involved in Kazakhstan’s energy development, mainly hydrocarbons, including upstream development and pipeline construction as well as domestic oil refining and gas processing. China’s equity shares in Kazakhstan’s oil production have increased rapidly, reaching 25% in 2009, and the 2013 visit of Chinese President Xi Jinping led to the signing of energy deals worth USD 30 billion, including the China National Petroleum Corporation (CNPC) acquisition of an 8.3% stake in Kashagan, the largest oilfield in the world outside the Middle East (http://astanatimes.com/2014/01/energy-cooperation-kazakhstan-china/). With completion of the Beyneu-Bozoy-Shymkent natural gas pipeline in 2015 (capacity of 15 bcm per year), exports to China increased to 5.2 bcm in 2018. (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).

The treaty establishing the Eurasian Economic Union (EAEU) came into force on 1 January 2015, the member states being Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. (http://www.eurasiancommission.org/en/Pages/default.aspx). The core objective was the free movement of goods, capital, services and people within the single market. Although the EAEU eliminated customs duties on trade among its member states, it excluded most energy commodities from its general trade rules. Rather, energy trade among Customs Union members is governed largely by special bilateral trade agreements (http://kazenergy.com/images/NationalReport15_English.pdf). According to the EAEU treaty, a common electricity market was to be operational by 1 July 2019, while the common markets for gas, oil and petroleum products are to be in place by 1 January 2025. (http://www.eurasiancommission.org/en/nae/news/Pages/17-11-2015-15.aspx). In May 2019, heads of EAEU countries signed an agreement on a common electricity market. It is expected to begin functioning when the rules on common trade enter into force (https://ria.ru/20190530/1555095463.html).

Oil product tariffs (except for A-80 and LPG) have been freed from direct state regulation: in December 2014 gasoline grades A-80, A-92 and A‑93 as well as diesel and LPG were regulated, while in September 2015 state regulation was lifted for gasolines A-92 and A‑93 and in July 2016 diesel was also excluded. The government will continue to administratively influence the prices of certain types of refined products (A-80 and LPG) until refinery modernisation is complete (http://www.kazenergy.com/upload/document/energy-report/National_Energy_Report-ENGLISH_03.09.pdf).

Kazakhstan’s retail prices for oil products continue to be among the lowest in the world (https://inbusiness.kz/ru/news/toplivo-v-kazahstane-ostaetsya-odnim-iz-deshevyh-v-mire). Even though administrative price reduction was phased out during 2014‑16, Kazenergy (2019) reports that the Committee for the Regulation of Natural Monopolies, Protection of Competition and Consumer Rights often fines retail stations for “anti-competitive” pricing practices and thereby keeps retail prices low (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf). Since April 2020, large gas stations in Kazakhstan have reduced their retail gasoline and diesel fuel prices as a result of government support measures, even though such administrative price reductions will affect their profitability all the way from production to retail (https://inbusiness.kz/ru/news/toplivo-v-kazahstane-ostaetsya-odnim-iz-deshevyh-v-mire).

Highly reliant on its significant fossil fuel resources, Kazakhstan is a net exporter of energy and energy products. However, some residents – in northern and central Kazakhstan – still do not have access to network gas because natural gas reserves are in the western part of the country, population centres are in the north, east and south, and the domestic pipeline system is underdeveloped. Kazakhstan therefore relies on gas imports from Russia and Uzbekistan to meet domestic demand: a gas-swapping arrangement between Kazakhstan and Russia entails the replacement of Karachaganak gas, which has historically been supplied to Orenburg for processing, with imports of Central Asian gas to the southern part of Kazakhstan and Russian gas to the Kostanay region (https://www.kmgep.kz/eng/investor_relations/annual_reports/).

Activities are, however, under way to expand networks to increase overall access to gas. Following an order of the former president in 2018, construction of the Saryarka gas pipeline was begun to provide gas to the capital city of Nur-Sultan as well as central and northern Kazakhstan by 2023. Pipeline construction began in November 2018, and in October 2019 the first stage from Kyzylorda to Nur-Sultan was completed (https://ru.sputniknews.kz/economy/20191129/12161758/Vtoraya-ochered-gazoprovoda-Saryarka-otsenivaetsya-v-124-milliona-dollarov.html).

The pipeline’s capacity will be 2.2 bcm of gas per year, and 171 settlements in the Karaganda and Akmola regions are expected to be provided with gas. These measures should improve the air quality of Nur-Sultan, as coal consumption is expected to decrease by 650 kt per year (https://inbusiness.kz/ru/last/stalo-izvestno-v-kakie-rajony-stolicy-v-pervuyu-ochered-provedut-gaz). In April 2020, installation of the main gas pipeline was being completed at Nur-Sultan (https://informburo.kz/novosti/v-nur-sultane-montazh-magistralnogo-gazoprovoda-nahoditsya-na-stadii-zaversheniya.html).

Strong economic growth and a rising standard of living are expected to boost energy demand considerably in upcoming years. To meet this rising demand in a reliable, affordable and sustainable manner, the government plans to expand generation capacity from various fuel sources through new investments and modernisation of existing capacity. However, construction of a 2 640‑megawatt (MW) coal-fired power plant at Balkhash Lake was suspended in 2016 because the Ministry of Energy decided that modernisation of power plants to date, the creation of substantial reserves and a decline in energy consumption growth render this plant unnecessary before 2022 (http://ratel.kz/kaz/v_kazahstane_ne_budet_elektrostantsii_samsung).

According to Kazenergy’s 2015 report, the availability of low-cost coal means the established fleet of large coal-fired power plants will continue to dominate until 2040, although gas-fired generation will also increase as Kazakhstan’s gas network expands. Kazenergy expects only modest growth in renewable energy production due to its intermittent nature and the technical and economic issues of integrating renewables into Kazakhstan’s unified energy system, unless there are significant changes in technical reliability in either renewables production (wind and solar in particular) or in grid operations (http://kazenergy.com/images/NationalReport15_English.pdf).

Low liquefied petroleum gas (LPG) prices have raised demand for the product. The LPG market is regulated, with the government setting a price limit on LPG every quarter, but there has been a deficit of LPG in the domestic market due to illegal exports to neighbouring countries where the price is much higher. Because low maximum wholesale prices and increased consumption in the domestic market have led to losses and deteriorating financial and economic conditions for the owners and producers of LPG, the Ministry of Energy had planned to phase out state regulation of wholesale prices (http://energo.gov.kz/index.php?id=49), but in 2019 regulation was still in place with the Minister of Energy approving a maximum LPG price (https://www.zakon.kz/4986539-predelnye-tseny-na-szhizhennyy-gaz.html).

Modernisation of the three refineries, completed in 2018, has helped reduce the need to import light crude oil products. Refinery throughput increased 10% in 2018 to 16.4 Mt, providing 93% of the domestic market’s gasoline supplies, 91% of its diesel and 62% of its jet kerosene (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf). New refinery capacities are expected to completely meet domestic needs by 2030.

Energy co‑operation between Kazakhstan and China is based mainly on China’s need to import energy for development and to diversify its import sources, and on Kazakhstan’s aim to diversity its export routes and expand export volumes. China is a key strategic energy sector partner, with Chinese companies involved in Kazakhstan’s energy development, mainly hydrocarbons, including upstream development and pipeline construction as well as domestic oil refining and gas processing. China’s equity shares in Kazakhstan’s oil production have increased rapidly, reaching 25% in 2009, and the 2013 visit of Chinese President Xi Jinping led to the signing of energy deals worth USD 30 billion, including the China National Petroleum Corporation (CNPC) acquisition of an 8.3% stake in Kashagan, the largest oilfield in the world outside the Middle East (http://astanatimes.com/2014/01/energy-cooperation-kazakhstan-china/). With completion of the Beyneu-Bozoy-Shymkent natural gas pipeline in 2015 (capacity of 15 bcm per year), exports to China increased to 5.2 bcm in 2018. (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).

The treaty establishing the Eurasian Economic Union (EAEU) came into force on 1 January 2015, the member states being Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. (http://www.eurasiancommission.org/en/Pages/default.aspx). The core objective was the free movement of goods, capital, services and people within the single market. Although the EAEU eliminated customs duties on trade among its member states, it excluded most energy commodities from its general trade rules. Rather, energy trade among Customs Union members is governed largely by special bilateral trade agreements (http://kazenergy.com/images/NationalReport15_English.pdf). According to the EAEU treaty, a common electricity market was to be operational by 1 July 2019, while the common markets for gas, oil and petroleum products are to be in place by 1 January 2025. (http://www.eurasiancommission.org/en/nae/news/Pages/17-11-2015-15.aspx). In May 2019, heads of EAEU countries signed an agreement on a common electricity market. It is expected to begin functioning when the rules on common trade enter into force (https://ria.ru/20190530/1555095463.html).

Oil product tariffs (except for A-80 and LPG) have been freed from direct state regulation: in December 2014 gasoline grades A-80, A-92 and A‑93 as well as diesel and LPG were regulated, while in September 2015 state regulation was lifted for gasolines A-92 and A‑93 and in July 2016 diesel was also excluded. The government will continue to administratively influence the prices of certain types of refined products (A-80 and LPG) until refinery modernisation is complete (http://www.kazenergy.com/upload/document/energy-report/National_Energy_Report-ENGLISH_03.09.pdf).

Kazakhstan’s retail prices for oil products continue to be among the lowest in the world (https://inbusiness.kz/ru/news/toplivo-v-kazahstane-ostaetsya-odnim-iz-deshevyh-v-mire). Even though administrative price reduction was phased out during 2014‑16, Kazenergy (2019) reports that the Committee for the Regulation of Natural Monopolies, Protection of Competition and Consumer Rights often fines retail stations for “anti-competitive” pricing practices and thereby keeps retail prices low (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf). Since April 2020, large gas stations in Kazakhstan have reduced their retail gasoline and diesel fuel prices as a result of government support measures, even though such administrative price reductions will affect their profitability all the way from production to retail (https://inbusiness.kz/ru/news/toplivo-v-kazahstane-ostaetsya-odnim-iz-deshevyh-v-mire).

Energy infrastructure and investment
Energy infrastructure and investment

Electricity

The Kazakhstan Electricity Grid Operating Company (KEGOC) reported that total installed capacity in Kazakhstan was 21.9 gigawatts (GW) on 1 January 2019, of which 18.9 GW was available capacity (https://www.kegoc.kz/ru/elektroenergetika/elektroenergetika-kazahstana-klyuchevye-fakty). Disaggregated data on the installed capacity of power plants by type are not available from official sources. Coal-fired plants account for 70.4% of power generation, mostly located in central, northern and eastern Kazakhstan. The 76 power plants connected to Kazakhstan’s unified energy system are grouped into three general categories for purposes of dispatch and operation: plants of national significance, plants of regional significance, and industry-owned facilities.

During the “tariff for investment” period, electricity investments rose (especially in 2009‑15). Nevertheless, in 2017 depreciation rate for nearly 36% of turbine equipment at existing thermal power plants was still over 75% (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).

Heat is produced by 40 co‑generation plants (45% of total heat energy production), 28 large boilers (35% of production) and 886 small boilers of less than 100 gigacalories per hour (Gcal/h) (20% of production) (http://kazenergy.com/images/NationalReport15_English.pdf). The heating network is 11 500 km long and transmission losses are 30%.

Kazakhstan maintains over 71 600 km of high-voltage transmission lines, mainly of 110 kilovolts (kV) and 220 kV. Of this total, KEGOC owns and operates 25 097 km of 0.4‑kV to 1 150‑kV high-voltage lines and 78 electric power substations with installed transmission capacity of 36 660 megavolt-amperes (MVA) (https://www.kegoc.kz/en/shareholders-and-investors/information-disclosure/annual-reports/2018). KEGOC constructed more than 1 700 km of lines and three new 500‑kV substations between 2014 and 2018: Semey, Aktogay and Taldykorgan. In 2018, KEGOC commissioned the high-voltage 500‑kV Shulbinskaya hydropower plant (HPP) Semey-Aktogai-Taldykorgan-Alma transmission line, which is the final stage of North-East-South 500‑kV Electricity Transmission Construction Project (https://www.kegoc.kz/en/shareholders-and-investors/information-disclosure/annual-reports/2018).

Kazakhstan has three main oil refineries as well as a number of mini plants with total annual capacity of 18.3 Mt. In 2018, modernisation of three major refineries was accomplished at a cost of USD 6 billion, reducing Kazakhstan’s dependency on oil product imports from Russia. Oil refining amounted to 16.4 Mt in 2018, a 1.5‑Mt increase from 2017. Since being modernised, Kazakhstan’s refineries can produce K-4 and K-5 fuels (corresponding to the Euro 4 and Euro 5 grades) (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).

Kashagan is one of the ten largest oilfields discovered in the world in recent years, at a cost of USD 50 billion; the first oil was extracted in September 2013, but after one month it was shut down due to pipeline leaks resulting from sulphide stress cracking. In January 2017, production at Kashagan field reached 180 000 barrels per day (b/d) following resumption of production in October 2016. Production capacity of Kashagan Phase 1 was expected to reach 370 000 b/d (http://oilprice.com/latest-energy-news/world-news/kashagan-production-ramping-up-to-180000-bpd.html). Kashagan’s output was 8.3 Mt in 2017 and 13.2 Mt in 2018, and daily production, which was variable because operations were suspended during part of April and May due to maintenance and repairs, reached 375 000 b/d in July. Kazenergy (2019) has reported that Kashagan could reach its maximum output of 45 Mt in 2040 (955 000 b/d). (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).

To facilitate oil exports to China, Kazakhstan launched the first stage of its cross-border oil export pipeline to China, the 962-km, 10-Mt/y Atasu-Alashankou pipeline, in December 2005. At a cost of USD 700 million, the pipeline was built as a 50-50 joint venture between the national Kazmunaygas (KMG) company’s subsidiary KazTransOil (KTO) and CNPC subsidiary China National Corporation for Exploration of Oil and Gas (http://kazenergy.com/images/nationalreport15_english.pdf). At the end of 2015, oil transportation through the Atassu-Alashankou pipeline in the direction of China was 11.8 Mt (http://www.kmg.kz/en/manufacturing/oil/kazakhstan_china/), while in 2018 oil transportation through the Kazakhstan-China pipeline dropped by 48% to 1.4 Mt (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf). In 2019, however, over 10.9 Mt of crude oil was delivered to China through the Kazakhstan-China pipeline (https://oilcapital.ru/news/export/21-01-2020/pochti-11-mln-tonn-nefti-poluchil-kitay-iz-kazahstana-v-2019-godu), and in January 2020 Kazakhstan had to suspend exports of oil to China due to poor fuel quality caused by an excess of organochlorine compounds (https://ru.sputniknews.kz/economy/20200128/12664743/eksport-kazakhstan-neft-china-minenergo.html).

Kazakhstan’s distribution pipelines reached a total length of 49 000 km in 2019. In 2015, domestic gas consumption was 12.1 bcm, or more than 2.5 times consumption in 2000 (http://www.kaztransgas.kz/files/KTG_annual_report_2015_eng.pdf). It rose to 13.7 bcm in 2017,  14.9 bcm in 2018 and 15.1 bcm in 2019 (https://www.kaztransgas.kz/images/01_reports/annual-2019-rus.pdf). The South Kazakhstan Region (or Oblast) has been receiving gas from the Aktobe Region since completion of the Beineu-Bozoi-Shymkent pipeline in 2016 connecting western Kazakhstan with the densely populated southern region. With a capacity of 10 bcm/y, this line decreases Kazakhstan’s dependency on Uzbek and Turkmen gas (http://energo.gov.kz/index.php?id=49). It also connects to Line C of the Central Asia Gas Pipeline (CAGP) network to eventually supply exports to China (http://kazenergy.com/images/NationalReport15_English.pdf). As part of actions to increase the capacity of the Beineu-Bozoy-Shymkent gas pipeline from 10 bcm/y to 15 bcm/y, three compressor stations were commissioned in April 2019 (https://www.kaztransgas.kz/images/01_reports/annual-2019-rus.pdf).

Pipeline gas is currently available in only 10 of Kazakhstan’s 14 regions, with the 4 remaining regions in the north and centre relying on coal and LPG. More than 3 million people have gained access to piped gas in the past seven years, with connections expanding from 30% in 2013 to 52% in 2019 and amounting to more than 9 million citizens. In December 2019, the first section of the Saryarka gas pipeline was commissioned. It is expected to provide natural gas to the Central Kazakhstan cities of Nur-Sultan, Karaganda, Temirtau and Zhezkazgan, and to 171 settlements along the main gas pipeline (approximately 2.7 million people) by 2040 (https://www.kaztransgas.kz/images/01_reports/annual-2019-rus.pdf).

One of the largest investment projects in the oil and gas industry is the Kazakhstan-China gas transit pipeline. In 2016, construction of three lines of the transnational Turkmenistan-Uzbekistan-Kazakhstan-China gas pipeline were completed, to eventually allow transit gas volumes to increase from 30 bcm/y to 55 bcm/y when compressor stations in Line C are operational (http://www.kaztransgas.kz/files/KTG_annual_report_2015_eng.pdf). Expansion of the Beineu-Bozoy-Shymkent pipeline’s capacity is expected to increase stable export supplies of marketable gas to China to 10 bcm per year.

KazTransGaz (KTG) is responsible for improving and developing the country’s gas infrastructure. In 2010, it began constructing compressed natural gas (CNG) filling stations and delivering CNG to improve the region’s environmental situation and to develop gas for transport (http://www.kaztransgas.kz/files/KTG_annual_report_2015_eng.pdf accessed 04.02.2017). 

Electricity

The Kazakhstan Electricity Grid Operating Company (KEGOC) reported that total installed capacity in Kazakhstan was 21.9 gigawatts (GW) on 1 January 2019, of which 18.9 GW was available capacity (https://www.kegoc.kz/ru/elektroenergetika/elektroenergetika-kazahstana-klyuchevye-fakty). Disaggregated data on the installed capacity of power plants by type are not available from official sources. Coal-fired plants account for 70.4% of power generation, mostly located in central, northern and eastern Kazakhstan. The 76 power plants connected to Kazakhstan’s unified energy system are grouped into three general categories for purposes of dispatch and operation: plants of national significance, plants of regional significance, and industry-owned facilities.

During the “tariff for investment” period, electricity investments rose (especially in 2009‑15). Nevertheless, in 2017 depreciation rate for nearly 36% of turbine equipment at existing thermal power plants was still over 75% (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).

Heat is produced by 40 co‑generation plants (45% of total heat energy production), 28 large boilers (35% of production) and 886 small boilers of less than 100 gigacalories per hour (Gcal/h) (20% of production) (http://kazenergy.com/images/NationalReport15_English.pdf). The heating network is 11 500 km long and transmission losses are 30%.

Kazakhstan maintains over 71 600 km of high-voltage transmission lines, mainly of 110 kilovolts (kV) and 220 kV. Of this total, KEGOC owns and operates 25 097 km of 0.4‑kV to 1 150‑kV high-voltage lines and 78 electric power substations with installed transmission capacity of 36 660 megavolt-amperes (MVA) (https://www.kegoc.kz/en/shareholders-and-investors/information-disclosure/annual-reports/2018). KEGOC constructed more than 1 700 km of lines and three new 500‑kV substations between 2014 and 2018: Semey, Aktogay and Taldykorgan. In 2018, KEGOC commissioned the high-voltage 500‑kV Shulbinskaya hydropower plant (HPP) Semey-Aktogai-Taldykorgan-Alma transmission line, which is the final stage of North-East-South 500‑kV Electricity Transmission Construction Project (https://www.kegoc.kz/en/shareholders-and-investors/information-disclosure/annual-reports/2018).

Coal

Coal is transported mainly by rail, as Kazakhstan has a sizeable rail system operated by the state-owned national company Kazakhstan Temir Zholy joint-stock company (NC KTZ JSC). Although coal is essentially a low-margin line of business for the rail industry, it is crucial because it constitutes the greatest turnover (in tonnes shipped and in tonne-kilometres [tkm]) of any single product for the railroad system.

High transportation costs, due to long distances between production sites and consumers, render Kazakhstan’s coal relatively expensive for consumers and reduce its competitiveness even in the Russian market. In fact, up to 40% of the final price of coal is made up of transportation costs (https://inbusiness.kz/ru/news/ugolnoj-otrasli-nuzhna-gospodderzhka). Because tariffs for using the main railway networks and railway services increased in 2019, the Association of Mining and Metallurgical Enterprises has called for state support of the coal industry (https://inbusiness.kz/ru/news/ugolnoj-otrasli-nuzhna-gospodderzhka).

Around 25‑30% of total coal produced is exported (mainly to Russia), but due to the limited competitiveness of Kazakhstan’s coal in international markets and the expected decline in exports to Russia, the domestic power sector is expected to become the main consumer of Kazakh coal.

Kazakhstan’s coal mines are particularly gassy and coal mine methane (CMM) accumulates to concentrations of up to 33 cubic metres (m³) per tonne in deep coal mines in the Karaganda basin, making its removal (“drainage”) a safety imperative. Among KTG’s investment activities is a prospecting project to produce CMM at Karaganda coal basin. However, a pre-feasibility study of CMM in Karaganda showed that CMM quality in the mines is not sufficient at current gas market prices to support projects for CMM enrichment for pipeline, CNG, or liquefied natural gas (LNG) applications. Nevertheless, it has been demonstrated that small-scale electricity generation at the production sites could be feasible (http://kazenergy.com/images/NationalReport15_English.pdf). 

Oil and gas

Kazakhstan has three main oil refineries as well as a number of mini plants with total annual capacity of 18.3 Mt. In 2018, modernisation of three major refineries was accomplished at a cost of USD 6 billion, reducing Kazakhstan’s dependency on oil product imports from Russia. Oil refining amounted to 16.4 Mt in 2018, a 1.5‑Mt increase from 2017. Since being modernised, Kazakhstan’s refineries can produce K-4 and K-5 fuels (corresponding to the Euro 4 and Euro 5 grades) (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).

Kashagan is one of the ten largest oilfields discovered in the world in recent years, at a cost of USD 50 billion; the first oil was extracted in September 2013, but after one month it was shut down due to pipeline leaks resulting from sulphide stress cracking. In January 2017, production at Kashagan field reached 180 000 barrels per day (b/d) following resumption of production in October 2016. Production capacity of Kashagan Phase 1 was expected to reach 370 000 b/d (http://oilprice.com/latest-energy-news/world-news/kashagan-production-ramping-up-to-180000-bpd.html). Kashagan’s output was 8.3 Mt in 2017 and 13.2 Mt in 2018, and daily production, which was variable because operations were suspended during part of April and May due to maintenance and repairs, reached 375 000 b/d in July. Kazenergy (2019) has reported that Kashagan could reach its maximum output of 45 Mt in 2040 (955 000 b/d). (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).

To facilitate oil exports to China, Kazakhstan launched the first stage of its cross-border oil export pipeline to China, the 962-km, 10-Mt/y Atasu-Alashankou pipeline, in December 2005. At a cost of USD 700 million, the pipeline was built as a 50-50 joint venture between the national Kazmunaygas (KMG) company’s subsidiary KazTransOil (KTO) and CNPC subsidiary China National Corporation for Exploration of Oil and Gas (http://kazenergy.com/images/nationalreport15_english.pdf). At the end of 2015, oil transportation through the Atassu-Alashankou pipeline in the direction of China was 11.8 Mt (http://www.kmg.kz/en/manufacturing/oil/kazakhstan_china/), while in 2018 oil transportation through the Kazakhstan-China pipeline dropped by 48% to 1.4 Mt (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf). In 2019, however, over 10.9 Mt of crude oil was delivered to China through the Kazakhstan-China pipeline (https://oilcapital.ru/news/export/21-01-2020/pochti-11-mln-tonn-nefti-poluchil-kitay-iz-kazahstana-v-2019-godu), and in January 2020 Kazakhstan had to suspend exports of oil to China due to poor fuel quality caused by an excess of organochlorine compounds (https://ru.sputniknews.kz/economy/20200128/12664743/eksport-kazakhstan-neft-china-minenergo.html).

Kazakhstan’s distribution pipelines reached a total length of 49 000 km in 2019. In 2015, domestic gas consumption was 12.1 bcm, or more than 2.5 times consumption in 2000 (http://www.kaztransgas.kz/files/KTG_annual_report_2015_eng.pdf). It rose to 13.7 bcm in 2017, 14.9 bcm in 2018 and 15.1 bcm in 2019 (https://www.kaztransgas.kz/images/01_reports/annual-2019-rus.pdf). The South Kazakhstan Region (or Oblast) has been receiving gas from the Aktobe Region since completion of the Beineu-Bozoi-Shymkent pipeline in 2016 connecting western Kazakhstan with the densely populated southern region. With a capacity of 10 bcm/y, this line decreases Kazakhstan’s dependency on Uzbek and Turkmen gas (http://energo.gov.kz/index.php?id=49). It also connects to Line C of the Central Asia Gas Pipeline (CAGP) network to eventually supply exports to China (http://kazenergy.com/images/NationalReport15_English.pdf). As part of actions to increase the capacity of the Beineu-Bozoy-Shymkent gas pipeline from 10 bcm/y to 15 bcm/y, three compressor stations were commissioned in April 2019 (https://www.kaztransgas.kz/images/01_reports/annual-2019-rus.pdf).

Pipeline gas is currently available in only 10 of Kazakhstan’s 14 regions, with the 4 remaining regions in the north and centre relying on coal and LPG. More than 3 million people have gained access to piped gas in the past seven years, with connections expanding from 30% in 2013 to 52% in 2019 and amounting to more than 9 million citizens. In December 2019, the first section of the Saryarka gas pipeline was commissioned. It is expected to provide natural gas to the Central Kazakhstan cities of Nur-Sultan, Karaganda, Temirtau and Zhezkazgan, and to 171 settlements along the main gas pipeline (approximately 2.7 million people) by 2040 (https://www.kaztransgas.kz/images/01_reports/annual-2019-rus.pdf).

One of the largest investment projects in the oil and gas industry is the Kazakhstan-China gas transit pipeline. In 2016, construction of three lines of the transnational Turkmenistan-Uzbekistan-Kazakhstan-China gas pipeline were completed, to eventually allow transit gas volumes to increase from 30 bcm/y to 55 bcm/y when compressor stations in Line C are operational (http://www.kaztransgas.kz/files/KTG_annual_report_2015_eng.pdf). Expansion of the Beineu-Bozoy-Shymkent pipeline’s capacity is expected to increase stable export supplies of marketable gas to China to 10 bcm per year.

KazTransGaz (KTG) is responsible for improving and developing the country’s gas infrastructure. In 2010, it began constructing compressed natural gas (CNG) filling stations and delivering CNG to improve the region’s environmental situation and to develop gas for transport (http://www.kaztransgas.kz/files/KTG_annual_report_2015_eng.pdf accessed 04.02.2017). 

Emergency response

Coal

Coal is transported mainly by rail, as Kazakhstan has a sizeable rail system operated by the state-owned national company Kazakhstan Temir Zholy joint-stock company (NC KTZ JSC). Although coal is essentially a low-margin line of business for the rail industry, it is crucial because it constitutes the greatest turnover (in tonnes shipped and in tonne-kilometres [tkm]) of any single product for the railroad system.

High transportation costs, due to long distances between production sites and consumers, render Kazakhstan’s coal relatively expensive for consumers and reduce its competitiveness even in the Russian market. In fact, up to 40% of the final price of coal is made up of transportation costs (https://inbusiness.kz/ru/news/ugolnoj-otrasli-nuzhna-gospodderzhka). Because tariffs for using the main railway networks and railway services increased in 2019, the Association of Mining and Metallurgical Enterprises has called for state support of the coal industry (https://inbusiness.kz/ru/news/ugolnoj-otrasli-nuzhna-gospodderzhka).

Around 25‑30% of total coal produced is exported (mainly to Russia), but due to the limited competitiveness of Kazakhstan’s coal in international markets and the expected decline in exports to Russia, the domestic power sector is expected to become the main consumer of Kazakh coal.

Kazakhstan’s coal mines are particularly gassy and coal mine methane (CMM) accumulates to concentrations of up to 33 cubic metres (m³) per tonne in deep coal mines in the Karaganda basin, making its removal (“drainage”) a safety imperative. Among KTG’s investment activities is a prospecting project to produce CMM at Karaganda coal basin. However, a pre-feasibility study of CMM in Karaganda showed that CMM quality in the mines is not sufficient at current gas market prices to support projects for CMM enrichment for pipeline, CNG, or liquefied natural gas (LNG) applications. Nevertheless, it has been demonstrated that small-scale electricity generation at the production sites could be feasible (http://kazenergy.com/images/NationalReport15_English.pdf). 

Kazakhstan has no specific programmes for emergency response in the energy sector. The Committee for Nuclear and Energy Regulation and Control is responsible for the readiness of power plants and electricity networks for the autumn-winter period. It also monitors the reliability and safety of electricity production, transmission, supply and consumption. The committee inspects the technical condition of power plant, grid and consumer energy equipment. In addition, it keeps records on investigations of significant consumer electricity blackouts and damage to large power equipment, and its investigations of major technological failures in the power and electricity networks led to the unified energy system being divided into several parts.

Departments of energy and housing utilities of local administrations (akimats) are responsible for the stable operation of heat sources and electrical networks, provision of normative fuel supplies, uninterrupted provision of electricity and heat to the cities and districts of the region, and equipment repairs for the upcoming heating season. 

The government of Kazakhstan adopted a National Plan for the Prevention of Oil Spills and Response at Sea and Inland Waters in 2012 (https://egov.kz/cms/ru/law/list/P1200000422), and the Kazakhstan Upstream Oil and Gas Technology and R&D Roadmap considers emergency response and disaster recovery as a part of the health, safety and environment (HSE) department’s operations (http://kazenergy.com/images/NationalReport15_English.pdf).

Emergency response

Kazakhstan has no specific programmes for emergency response in the energy sector. The Committee for Nuclear and Energy Regulation and Control is responsible for the readiness of power plants and electricity networks for the autumn-winter period. It also monitors the reliability and safety of electricity production, transmission, supply and consumption. The committee inspects the technical condition of power plant, grid and consumer energy equipment. In addition, it keeps records on investigations of significant consumer electricity blackouts and damage to large power equipment, and its investigations of major technological failures in the power and electricity networks led to the unified energy system being divided into several parts.

Departments of energy and housing utilities of local administrations (akimats) are responsible for the stable operation of heat sources and electrical networks, provision of normative fuel supplies, uninterrupted provision of electricity and heat to the cities and districts of the region, and equipment repairs for the upcoming heating season. 

The government of Kazakhstan adopted a National Plan for the Prevention of Oil Spills and Response at Sea and Inland Waters in 2012 (https://egov.kz/cms/ru/law/list/P1200000422), and the Kazakhstan Upstream Oil and Gas Technology and R&D Roadmap considers emergency response and disaster recovery as a part of the health, safety and environment (HSE) department’s operations (http://kazenergy.com/images/NationalReport15_English.pdf).

Next Market design