Doctor of Economic Sciences, Professor, PhD Yanovskaya O. A.,

Sandibekova S.G.

Kazakh-British technical university, Kazakhstan

Analysis and evaluation of oil and gas sector in Kazakhstan

In the development strategy of Kazakhstan 2030 long-term priorities predefine efficient use of energy resources. In order to generate revenue by rapidly decreasing the mining and oil and gas exports for economic growth and rising living standards.

Kazakhstan in the CIS is the second after Russia in terms of oil production. Development of oil and gas industry is a major factor of formation the national economy. Oil and gas industry is promising sector of the economy over the next 20 years. Oil and gas industry has a significant impact on socio-economic development of the country and its regions, contributes to the development of all sectors of the economy.

The president of Kazakhstan Nazarbayev N.A. said: “Oil has become not just an important sector of the domestic industry, but also a symbol of independent statehood, hoping for a better future”.

In program development of oil and gas industry Kazakhstan for 2010-2014 forecast of recoverable hydrocarbon resources in Kazakhstan amounts to 17 billion tons. Kazakhstan oil reserves among the 15 leading countries of the world. Kazakhstan has significant reserves of hydrocarbons - 3.3% of world reserves.

There are 42 oil and 172 oil condensate field (including 80 under development) in the country, which occupy about 62% of Kazakhstan. Main oil reserves in Kazakhstan (90%) are concentrate on the 15 largest fields - Tengiz, Kashagan, Karachaganak, Uzen, Zhetibay etc. the fields are situated on the Aktobe, Atyrau, West-Kazakhstan and other regions. For Kazakhstan more promising source of energy becomes natural gas, reserves of Kazakhstan ranks 14th in the world and 4th among the CIS countries after Russia, Turkmenistan and Uzbekistan. Geographical distribution of natural gas reserves allocated 98% of all gas reserves are located in Mangystau, Aktobe, Atyrau, West-Kazakhstan regions.

In Kazakhstan, more than 70% of the oil provide foreign investorsfrom U.S., China, Russia, the European Union (hereinafter - EU),represented by such large national and multinational companies such as ExxonMobil, Chevron, Agip, BG, BP / Statoil, Shell , Total, INPEKS, Philips, Lukoil, Oman Oil, Eni and others.

Crude of oil and condensate production in the country in 2009 amounted to 76.5 million tons in 2010 - 79.7 million tons, an increase compared to 2008 by 8.5%.

Gas production mining companies of Kazakhstan confirms thesteady growth in production - in 2009 produced 36.0 billion cubic meters. m. of gas in 2010, 37.4 billion cubic meters. m of gas, which is 10.5% higher than the level of gas production in 2008.

Major oil and gas companies in the Republic of Kazakhstan

3,0

Bln.

m³

6,0

mln.

tons

0,4

Bln.

m³

8,9

mln.

tons

15,0

Bln.

m³

11,9

mln.

tons

11,7

Bln.

m³

22,5

mln.

tons

"CNPC-International Aktobe Petroleum"

Exploration and Production "KazMunayGas"

Karachaganak Petroleum Operating BV

TCO

Significant volumes of gas are used for mining companies own needs or are sent for re-injection. Extraction of the raw gas is 36.0billion cubic meters. m, the use of raw gas - 16,3 billion cubic meters. m, the production of dry gas - 19,7 billion cubic meters. m.

Domestic consumption of 36% is provided by imports of gas supplied to the south of the Republic from Uzbekistan and the north from Russia, in exchange for a similar amount of Karachaganak gas from Kazakhstan to Russia. This is due to the fact that the system of gas pipelines in these areas has been created during the construction period of the Soviet gas pipeline system.

There are three refineries (Atyrau Oil Refinery, the Pavlodar Petrochemical Plant, PetroKazahstan Oil Products) and 32 mini-refineries with a license for oil refining in Kazakhstan, with a capacity from 10 to 600 tons per year. Current production is a mini-refinery intermediate, raw material for secondary or deep processing, since it does not meet the required standards. Most manufactured products are exported to the mini-refineries outside the country.

Processing of oil was 12.1 million tones in 2009, or 98.8%, compared to 2008.

Consumption of main petroleum products shows a certain imbalance between production and consumption of petroleum products for 2000-2010 in Kazakhstan.

Title	2000 г.		2010 г.
	Consumption, thousands of tons	Production, thousands of tons	Consumption, thousands of tons	Production, thousands of tons
petrol	1833,0	1266,1	3412,0	2589,1
gasoline	2383,0	1971,4	3582,8	3795,3
kerosene	183,0	60,1	415,8	373,5
fuel oil	1180,0	2142,1	1252,2	3237,0
Total	5579,0	5439,7	8662,8	9994,9

Deficit of petroleum products and its imports characterize the general lack of technological state, which unable to meet domestic needs in Kazakhstan.

The hydrocarbon feedstock is mainly exported and used for fuel option, primary processing of hydrocarbon raw material is based on the separation of oil and gas production without further petrochemical feedstock.

The gas oil and gas complex of the republic, basically, is incidental, therefore, it requires processing at gas processing plants to develop marketable gas. The country has three gas processing plants with total capacity of processing 18.9 billion cubic meters. m of gas per year: Kazakh gas refinery, Tengiz Gas Processing Plant, Zhanazhol Gas Processing Plant.

The dynamic development of oil and gas industry is very important to the economy of Kazakhstan. Oil and gas industry plays an important role in the economic structure of the Republic of Kazakhstan.

The increase in hydrocarbon production requires further development of oil - gas transportation infrastructure. The main active export routes of Kazakh oil pipeline are Atyrau - Samara, Caspian Pipeline Consortium (CPC), pipeline Atasu - Alashankou, port of Aktau.

The largest volume of Kazakh oil in recent years exported by the CPC pipeline - 27.5 million tons and Atyrau-Samara - 17.5 million tons. In China - 7.7 million tons, of which 6.2 million tons of Kazakh oil. Marine exports amounted to 11.1 million tons by rail was shipped 4 million tons. At the Orenburg gas processing plant delivered 1.8 million tons of gas condensate. Russian oil transit through Kazakhstan to China - 2.0 million tons.

The volume of export of Kazakh gas - 7.0 billion m³, volume of international gas transit through the territory of the Republic of Kazakhstan amounted to 73.3 billion m³ (Russia - 48.0 billion m³, Turkmenistan - 11,9 billion m³, Uzbekistan - 13.4 billion m³)

Transportation and transit of gas through the territory of the Republic of Kazakhstan is carried out on the main pipelines – "Central Asia Center", "Bukhara gas-bearing area - Tashkent - Bishkek - Almaty", "Kazakhstan - China", "Orenburg-Novopskov", "Bukhara-Ural".

The problem of effective management of oil and gas sector of Kazakhstan has a special place. Oil is a strategically important raw materials

and oil and gas industry is a link of economic development.

Necessary to attract capital and innovation; create a system of export pipelines;

create an energy infrastructure; effective use of revenues from resource exports.

Oil production as a strategically important sector of the economy, provide and ensure the country for a long time, stable development, foreign exchange earnings due to the volume of oil exports.

Despite a gradual increase in oil production in the whole efficiency of resource use remains low. The oil is mainly exported and only a small portion for processing.

Major oil companies in Kazakhstan are developing dynamically, but their development can influence and the global economy such as changing conditions in world markets, fluctuations in world prices.

In the presence of huge oil reserves in Kazakhstan has enjoyed a steady growth of oil shortages and rising prices. Rising world prices for crude oil delivery company focuses on exports.

Oil and Gas Potential of Kazakhstan must serve the interests of economic growth, innovative development of a rational approach to its use, combined with the increased competitiveness of manufacturing industry, the overall efficiency of the economy.

After the evaluating the status and development of oil and gas sector of Kazakhstan is expedient to conduct the following activities

- to increase oil production and combine with more stringent control over transfer pricing;

- clear definition of the volume increase of hydrocarbons, which would be sufficient for the domestic market, taking into account the needs of processing plants, export, and compensation due to the transfer of raw materials from other countries to the processing plants;

- build their own processing facilities;

- rational use of available hydrocarbon resources;

- strength of environmental controls and tightening of the sanctions regime for the activities of oil companies;

- reducing dependence on supplies from countries near and far abroad by building their own lines with the strategic interests of the state;

- further development in Kazakhstan, integrated oil companies complexes based on oil production, refining and petrochemical.

Literature review:

1. Analytical Service of Rating Agency. Analysis of the oil industry of the Republic of Kazakhstan, 2010.

2. Kabyldin К.М. The strategic priorities for the development of oil and gas industry RK – framework for energy security. Astana // Pipeline transport: Theory and Practice, 2010.

3. Nazarbayev N.А. Kazakhstan – 2030: Prosperity, security and the welfare of all Kazakhstan: Message from the President to the people of Kazakhstan. Almaty., 1997.- p.256 // Industry of Kazakhstan 2003.- № 11.- p. 12.

4. Strategic Plan for Development of Kazakhstan till 2020.