Kazakhstan Improvement 2030

Topics: Petroleum, Peak oil, Natural gas Pages: 73 (9705 words) Published: November 10, 2013
Oil and gas
Industry report
Miramgul Maralova
miramgulm@halykbank.kz
7(727)2446538

Cash in the barrel
December 29, 2012

The oil and gas industry is the leading sector of Kazakhstan‗s economy. It is responsible for the preponderance of exports and fiscal revenue, and is the target for the overwhelming majority of direct international investments. In a 2012 BP Statistical Review, Kazakhstan ranked 12th globally in the amount of proven oil

reserves and ranked 16th in production worldwide.
Energy exports have been a major driver of Kazakhstan‘s
economic growth over the last decade, as oil production rose significantly and global oil prices were high. However, such growth has made Kazakhstan dependent on oil exports and vulnerable to fluctuations in oil prices.

In the past several years, the government of Kazakhstan has
moved to rectify these vulnerabilities in the hydrocarbons sector and has become more assertive towards foreign consortia and
smaller industry players. The government hiked taxes on oil
production and exports, tightened regulations, particularly
environmental, local content requirements and transfer pricing, expanded the role of KazMunaiGas NC, the state-owned oil
company, by introducing a first buyer right for the sales of subsoil rights. All these as well as other fiscal tools have allowed the government to increase its stake in Kazakhstan‘s two giant projects, Kashagan, oil reserves off the Caspian Sea and

Karachaganak, a gas condensate field in the northwest. Labeled ‗resource nationalism‘ worldwide, in Kazakhstan this policy shift reflects several trends at once.
While Kazakhstan‘s investment climate is considered to be one of the most stable in the CIS, we believe that asserting more power in the sector is a clear risk.
In this report we provide an overview of the regulatory and fiscal regime; explore the investment climate and risks; and analyze the effects of resource nationalism. The analysis includes a description of all three Kazakhstan‘s key oil and gas projects and smaller industry players, including a profile of fuel transportation and refining sectors.

Oil and gas industry

December 2012

Executive summary

4

1 Investment and regulatory environment

7

1.1

Production and reserves

7

1.1.1

Oil

7

1.1.2

Gas

7

1.2

Economic outlook

9

1.3

The role of the State: resource nationalism

11

1.4

Fiscal environment

14

1.4.1

The new tax code

14

1.4.2

The 2010 Law on Subsoil and Subsoil Use

16

1.4.3

Preemptive right of state

19

1.4.4

New Law on Gas and Gas Supply

21

1.5

Investment climate and risks

2 Industry overview

22
25

2.1

Structure

25

2.2

Large key oil and gas projects of Kazakhstan

26

2.2.1

Tengiz

26

2.2.2

Karachaganak

28

2.2.3

Kashagan

29

2.2.4

KazMunaiGas National Company

32

2.2.5

KazMunaiGas EP

37

2.2.6

Mangistaumunaigas

38

2.2.7

Aktobemunaigas

38

2.2.8

Kazakhoil Aktobe

39

2.2.9

PKI

39

2.3

Smaller industry players

40

2.3.1

Zhaikmunai

41

2.3.2

Max Petroleum

42

2.3.3

Tethys Petroleum

43

2.3.4

Jupiter Energy

44

2.3.5

Roxi Petroleum

45

2.3.6

Condor Petroleum

46

2.3.7

Caspian Energy

47

2.3.8

Small private companies

48

3 Exports
3.1

49

Oil transportation

49

3.1.1

KazTransOil

51

3.1.2

Caspian Pipeline Consortium (CPC)

52

3.1.3

Kazakhstan-China Pipeline (KCP)

52

3.1.4

Kenkiyak – Atyrau (Munaytas Company)

53

3.1.5

Karachaganak Atyrau Transportation System (KATS)

53

3.1.6

Yeskene-Kuryk

53

3.1.7

Kazmortransflot

54

3.2

Gas transportation and marketing

3.2.1

KazTransGas

55
56
2

Oil and gas industry

December 2012

3.2.2

Central Asia - China pipeline

57

3.2.3

Bukhara – Ural gas pipeline

57...
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