Natural Gas: Kazakhstan’s Other Natural Resource

By Michelle Witte

Oil and Gas in KazakhstanKazakhstan is a country rich in fuels of all sorts. It is a major supplier of oil and uranium, and is now working toward cleaner, renewable energies like solar and wind power. It is also a major source of a fuel that some see as a cleaner link between traditional, polluting fuels and the renewable future: natural gas.

With oil and nuclear energy dominating the conversation about Kazakhstan and with President Nursultan Nazarbayev announcing plans to build a nuclear power plant in the country in his Jan. 17 state-of-the-nation address, its natural gas reserves are often overlooked. However, the country is among the world’s top 20 nations in natural gas reserves, with reserves the size of Kuwait’s and Canada’s. On Jan. 13, 2014, Kazakhstan’s Oil and Gas Ministry assessed the country’s reserves at 3.8 trillion cubic meters, taking into account newly accessible fields in the Caspian Sea. (The CIA World Factbook lists Kazakhstan’s proven natural gas reserves as 2.4 trillion cubic meters as of Jan. 1, 2013.)

Because of a lack of infrastructure development, the country has only had a few years of net gas exports. A new focus on developing the natural gas industry is expected to change this, as new pipelines connect gas-producing regions to the rest of the country and beyond.

Expanding Consumption and Production
Gas KazakhstanKazakhstan’s gas production has lagged behind its bigger oil industries. However, gas production has more than tripled since 2000, according to BP estimates.

According to BP’s Statistical Review of World Energy 2012, Kazakhstan increased its gas production by 2 percent in 2012, to 19.7 billion cubic meters, while the country’s gas consumption grew by 2.6 percent to 9.5 billion cubic meters. The county’s oil and gas ministry reported in January 2013 that it had exported 8.8 billion cubic meters of gas in 2012, a 3.7 percent increase on the year before.

Domestic consumption is growing rapidly as the country continues to modernize, and rose 3.2 percent to 10.5 billion cubic meters in 2012. From Jan.-Aug. of 2013, the ministry reported, the country produced 27.7 billion cubic meters of natural gas, consumption was 6.6 billion cubic meters and exports reached 5.03 billion cubic meters.

Most of Kazakhstan’s natural gas is associated gas—gas which exists along with significant oil reserves, and Kazakhstan’s biggest gas producing fields are also its biggest oil producers. Historically, most of Kazakhstan’s natural gas has been pumped back into oil wells to enhance oil production. However, the oil and gas ministry reported that last year, 55 percent of natural gas production was commercial production.

As of the end of October 2013, Kazakhstan had 14 processing plants associated with its natural gas fields. This number will increase as the country continues to invest in natural gas.

Kazakhstan Gas ProductionA Gas-Rich West
Kazakhstan is dotted with natural gas reserves, but over three quarters of its natural gas is in the west of the country, including in the oil-rich Caspian region. Two of the largest are the Kashagan field in the North Caspian Sea and the Karachaganak field in the country’s northwest, just outside the city of Oral.

Kashagan, also a giant oil field, is estimated to contain 2.88 trillion cubic meters of gas, Hans Wenck, external communications manager of the North Caspian Operating Company operating the field told EdgeKz. However, he said, the gas contains high levels of hydrogen sulfide and carbon dioxide which would need to be cleaned before sending the gas to market. The current plan is to re-inject the gas into the reservoir to help the oil recovery process.

Karachaganak field is one of the world’s largest gas fields and may contain 1.3 trillion cubic meters of gas, in addition to liquid condensate and oil. It was discovered in 1979 and is currently being developed by Karachaganak Petroleum Operating BV, a partnership comprised of KazMunayGas, BG Group, Eni, Chevron and Lukoil. Production from this field has made up nearly half of all gas production in the country as a whole at times.

Other major fields in Kazakhstan include the Kvalynskoye field in the North Caspian, estimated to have 127 billion cubic meters of recoverable natural gas. Kvalynskoye, also in the North Caspian, is a major field not yet in operation. It is expected to have 127 billion cubic meters of recoverable gas reserves and is expected to become operational in 2016.

A Cleaner Fossil Fuel?
Natural gas is touted as a cleaner power source than burning coal or oil, as burning natural gas releases less nitrogen oxide and carbon dioxide than does burning coal or oil. But natural gas still does produce those emissions, as well as methane, and is still a non-renewable fossil fuel, the extraction of which destroys natural habitats. In September 2013, Kazakhstan’s Minister of Environment and Water Resources Nurlan Kapparov reported that the country ranked 17th in the world in terms of emissions, mostly due to power generation, mining and transport.

The country has put into place programs to discourage gas flaring (releasing oil-associated gas as a waste product and burning it off). The country also has laws mandating that subsoil users create programs for processing associated gas. These programs must be updated every three years and approved of by an authorized body in the oil and gas resources sphere.

Laws requiring plans for using natural gas and reducing gas flaring are part of the country’s efforts to extract fuel in a more environmentally sensitive manner, and its desire to transform into a green economy can be expected to shape its extractive industries as well.

Expanding Transit Networks
The sprawling country in the middle of the Eurasian continent is on the cusp of a major transportation boom, and as new highways and railroads are being built to carry goods overland, new pipelines are being laid to whisk fuel along underground. These pipelines will help feed domestic demand as well as carry gas to the region’s huge consumer, China. China is a major investor in Kazakhstan’s energy sector, and invested more than $10 billion in it in 2012, according to the China National Petroleum Company (CNPC).

In 2007, work was begun on what is now called the Central Asia-China gas pipeline. Two parallel lines, bringing gas nearly 2,000 kilometers from Turkmenistan, Uzbekistan and Kazakhstan to China, have been completed, and a third line was expected to begin transporting gas in January 2014. The pipeline capacity is expected to reach 55 billion cubic meters a year by 2015, according to Pipelines International. Kyrgyzstan closed out 2013 by ratifying a $2 billion dollar deal to build an alternate route for the pipeline through its territory.

Resources of KazakhstanIn addition to its original and primary goal of bringing Turkmen gas to China, the pipeline distributes gas along smaller domestic networks within Central Asian countries. In September, the first phase of a major new Kazakhstan-China pipeline was completed, coinciding with Chinese President Xi Jinping’s visit to the country. The pipeline will carry gas 1,143 kilometers from Bozoy, in Central Kazakhstan, to Shymkent, where it will connect with the Central Asia-China pipeline network. Phase two, from Beyneu in Western Kazakhstan’s Mangystau Province, to Bozoy, should be completed in 2015.

In 2013, the country also expanded the capacity of the Atasu-Alashankou section of the Kazakhstan-China pipeline, another section of pipeline that brings natural gas from Western Kazakhstan to domestic consumers across the country before connecting to the CNPC pipeline network. The Atasu-Alashankou section was to reach a capacity of 20 million metric tons per year (mtpy) by the end of 2013, and the whole pipeline is to reach that capacity by 2015.

State investments in natural gas transportation have grown steadily over the last decade and should continue to grow in the future, as more towns are gasified. A 2012 law mandates the creation of “conditions for uninterrupted gas supply to the widest possible range of customers and [increasing] the share of gas in the energy balance in Kazakhstan …” among other gas-related concerns.

In 2013, 24 investment projects were planned for building more than 620 kilometers of gas pipelines in the country’s major cities. Malik Salimgereyev, managing director of the Samruk Kazyna national fund, announced at the end of 2013 that Kazakhstan had seen the transit of 109 billion cubic meters of natural gas in 2013. As production and capacity continues to grow, natural gas will play an increasing role in the country’s energy and transportation economy.

Oil Gas KazakhstanFour Big Fields
Over 75 percent of Kazakhstan’s natural gas is concentrated in four big fields, according to the Wood Mackenzie energy research provider.
• Kashagan, under the shallow North Caspian, contains 2.88 trillion cubic meters of gas, mostly sour gas with high amounts of hydrogen sulfide and carbon dioxide, both of which would need to be removed before sending it to market. It is expected that 80 percent of Kashagan’s gas will be re-injected into the reservoir to help the oil recovery process.
• Tengiz lies along the shore of the Northeast Caspian Sea and contains 1.8 trillion cubic meters of mostly sour gas, much of which is being re-injected into the oil reservoir.
• Karachaganak in the country’s upper northwest is thought to contain 1.37 trillion cubic meters of gas.
• Imashevskoye field, in the Caspian Sea, is thought to contain over 100 billion cubic meters of gas and is being explored and operated by Russia’s Gazprom and Kazakhstan’s KazMunayGas.

Trending Kazakhstan News

The Astana Times
The Atom Project