10.11.2021
In October of this year, the Kazenergy Association presented to the audience the next national energy report, which is devoted to the analysis of the Kazakh and global fuel and energy complex in the context of the opportunities and challenges of the new world energy agenda. The Association’s research suggests the current and forecast state of the entire energy sector of Kazakhstan. A comprehensive study of the energy potential of the state opens up opportunities for fact-based planning and systematic development of the industry itself in particular, and the entire economy as a whole. In the light of the ongoing global transformations in the field of energy production and consumption, it is important for Kazakhstan, as a major energy player, to take into account all the changes and opportunities for adapting its economic strategy to the new conditions of the present and the future.
Many of the keys to understanding these difficult issues are provided by the published national energy report, which offers its forecast scenarios of Kazakhstan and world energy until 2050. The research will be interesting not only for industry specialists or economists, but also for specialists in the field of international relations. The statistics, facts and conclusions contained in the report reveal the current and prospective economic development of regions and states (in the context of energy consumption), which are important for Kazakh diplomacy.
One of the sponsors of this study was CNPC International in Kazakhstan (CNPC). CNPC’s participation in a comprehensive industry study is due to the corporation’s role in the development of Kazakhstan’s oil and gas sector, as well as the strategic importance of the Chinese energy market. Kazakhstan is an important supplier of energy resources for China (in the context of the Chinese strategy of diversification of oil and gas imports), which is today the largest global energy consumption market and demand for which continues to increase in light of the growth of the Chinese economy. According to the National Energy Report, in 2020, the total volume of Kazakhstan’s exports to China increased by more than 50% to 3.8 million tons (76,000 barrels per day). Gas exports from Kazakhstan to China last year amounted to 7.4 billion rubles, according to the report. cubic meters (in 2015 – 1 billion cubic meters).
KNPC International has been one of the largest players in the domestic oil and gas industry in Kazakhstan since 1998. According to the Kazenergy National Analytical Report, the main assets of CNPC in Kazakhstan include controlling stakes in JSC “SNPS-Aktobemunaygas” and “PetroKazakhstan”. In 2020, China’s share in Kazakhstan’s oil production (including not only CNPC, but also other Chinese companies) accounted for 13.8 million tons (290,000 barrels. per day) or 16.1% of the national figure, and in 2019 – 15.6 million tons (329,000 barrels. per day) or 17.3% of the national figure. The decline in production volumes was influenced by the state of the world economy under the influence of COVID-19, the analysis of the impact of which on the energy sector is also presented in detail in the report of the Kazenergy Association.
We will add a number of facts to the information of the National Report, which, in our opinion, reflect the importance of cooperation between Kazakhstan and CNPC. Thus, several major achievements are associated with the activities of the Chinese corporation in our country, which are beneficial, first of all, for Kazakhstan.
First, the real diversification of Kazakhstan’s oil exports. Since Kazakhstan has no access to the sea, the diversification of its oil and gas export routes has been and still remains one of the main directions of state policy in terms of energy security. The development of alternative export channels is important for Kazakhstan from the position of balancing the supply of the most important raw materials to world markets. The construction and commissioning of the Atasu-Alashankou oil pipeline opened the eastern export direction. Previously, all Kazakh oil was exported only through Russian oil pipelines, which is unprofitable from the position of focusing only on one direction (one of the most important business principles is “not to keep all the eggs in one basket”). And the American Baku-Tbilisi-Ceyhan project, widely advertised in the early 2000s, did not give any results (in the Kazenergy report, this pipeline is also not taken into account when building scenario export forecasts, etc.). In this regard, the opening of the Chinese export direction opened up new prospects for the Kazakh oil sector.
Secondly, the construction of oil and gas infrastructure of regional importance. Over the years, CNPC has built an extensive oil and gas transport infrastructure in Central Asia, which has turned Kazakhstan into a Eurasian energy hub. Currently, gas from Turkmenistan and Uzbekistan, as well as oil from Russia, is exported through the infrastructure passing through the territory of the Republic of Kazakhstan. All this brings profit to the budget of the Republic of Kazakhstan as a transit fee. To understand the significance of this infrastructure, one important fact needs to be recalled. The energy transportation infrastructure built in the 2000s in Kazakhstan and Central Asia became the basis for the launch of the international initiative “One Belt, One Road” (the most important component of the modern foreign policy of the People’s Republic of China), which was announced in 2013 in the capital of Kazakhstan and significantly expanded the foreign economic opportunities of our country. The key component of the Belt and Road initiative is to increase the interconnectedness of economies, and what in this case can be more efficient than the extraction and supply of energy resources under contracts designed for decades to come. The Kazenergy report presents in detail the economic indicators of the development of the Central Asia–China pipeline.
Thirdly, new approaches to the development of deposits. The specifics of the work of CNPC in the Republic of Kazakhstan is the focus on the development of mature fields (where production has been going on for a long time and easily extracted resources have already been exhausted, a reorganization of the production process is required), which Western corporations refused at one time due to the complexity of oil extraction. Due to its own technological innovations in the field of oil production, CNPC was able to increase the return on mature oil fields in the Republic of Kazakhstan. Today, the corporation is a leader in the field of precision exploration in old oil and gas zones, secondary development of old oil fields, etc. For the economy of our state, this means the continuation of the work of mining enterprises, the preservation of jobs for the local population and tax revenues.
Another visible achievement of the CNPC in Kazakhstan is the modernization of the Shymkent Oil Refinery, which, after a technological upgrade, works stably and non-stop. The National Energy Report reveals these topics in different contexts, offering accurate statistics and conclusions based on facts.
CNPC’s assistance in the implementation of such foresight studies suggests that the Chinese corporation has come to Kazakhstan for a long time and is focused on the further development of the Kazakh energy sector. Taking into account the fact that modern CNPC is a high-tech energy corporation (3rd place among the 50 largest oil companies in the world, 4th place in the Fortune Global 500 rating), this opens up new opportunities for Kazakhstan in the development of the oil and gas sector:
1) regarding the potential further increase in energy exports to China in the light of steadily growing energy consumption in this country (according to China Energy Outlook 2050, in 30 years, China’s energy demand may increase by 2 times, which will require an increase in consumption of all types of fuel),
2) in terms of the technologization of the Kazakh energy industry.
With regard to the potential increase in energy supplies to the Chinese market, as the data of the National Energy Report show, Kazakhstan has sufficient reserves of all types of fuel. And as for the technologization of the industry, at the moment, for example, such an opportunity is the CNPC project for the utilization and processing of associated natural gas in oil fields (which is simply burned today). So, according to available data, about 2.4 billion cubic meters of unused associated gas are burned annually in our country, the potential income from the sale of this volume at current prices can reach several hundred million dollars per year. In addition to profit, the use of associated gas will also have a positive impact on the environment (burning of associated gas leads to emissions of 6 million tons of carbon dioxide per year).
Such projects implemented by CNPC will help bring the fuel and energy complex of the Republic of Kazakhstan to a new level of technological development, forming new profitable items for the Kazakh economy and improving the environment.
Link to National Energy Reports for the entire period:
https://www.kazenergy.com/ru/operation/ned/2117/
China Studies Centre,
Nur-Sultan, 2021
Number of shows: 3266
