Kazakhstan aims to increase crude and gas condensate production by nearly 25% to 2.155 million b/d by 2025, according to the country’s development strategy released Tuesday.
- Kashagan and Tengiz key to increase
- Revamp of refining facilities, changes to export tax
- Strategy based on $55/b for Brent
The mid-term increase in the output will be underpinned by development of the giant Kashagan oil field in the Caspian Sea and the future expansion of the Tengiz project, according to the strategy, which was posted on the government’s official website.
The output forecast is based on the assumption of a Brent oil price of $55/b, according to the document which was approved by President Nursultan Nazarbayey.
The country’s production amounted to 86.2 million mt, or around 1.731 million b/d in 2017, up 10.5% year on year, mainly due to a rise in production at Kashagan.
Kazakhstan’s output is on the rise despite its commitments to reduce the output by 20,000 b/d from November 2016’s level of 1.8 million b/d under the OPEC /non-OPEC production cut deal.
Kashagan was re-launched just three months before the agreement came into force in January 2017, after years of delays and major cost overruns.
The increase in production is set to continue in 2018 as production at Kashagan is expected to grow to 370,000 b/d by the middle of 2018, up from around 250,000 b/d at the end of 2017, the energy ministry said earlier.
The Chevron-led Tengiz project, one of the three key producing fields in Kazakhstan, is expected to increase production by 260,000 b/d by 2022, from around 562,300 b/d in 2017, through implementation of the expansion phase approved by the project’s shareholders in 2016.
In late 2017, the government reconsidered its upstream legislation to boost exploration work in the country, improving the economic potential of new reserves, in a move that has already sparked interest from potential investors.
The recent changes allow for an acceptable level of profitability at complicated fields, namely Caspian and deepwater, the CEO of Russia’s Lukoil, Vagit Alekperov, said last week. “We are interested in the Caspian blocks. We are considering two blocks along the border with Russia,” Alekperov said.
Lukoil is active in the Russian sector of the Caspian Sea, while two joint Kazakh-Russian projects in the Caspian Sea, in which Lukoil is taking part, have seen multi-year delays due to legislative drawbacks.
Under the strategy up to 2025, Kazakhstan also plans to expand its refining and petrochemical infrastructure to produce high-quality oil and petchem products.
To ensure crude refining is profitable, authorities are considering changes to the export duty and excise for various oil products, it said, without elaborating.
Kazakhstan’s three refineries have undergone major first-stage modernization recently, to improve the quality of their products’ baskets.
Authorities hope the modernization will allow the country to produce high-quality motor fuels in volumes exceeding domestic consumption that can be exported. So far, Kazakhstan depends on imports of motor fuel, primarily from Russia.
The current stage of the modernization, which is expected to be fully completed later this year, is set to increase the refineries’ combined capacity to 16.5 million mt/year from 13.8 million mt previously.
The government is also considering the possibility of building a fourth refinery.
The latest plan includes preparation of a feasibility study in October-November, after which the government will take a decision on the plant’s location and its capacity, local media quoted energy minister Kanat Bozumbayev as saying last week.
–Nadia Rodova, [email protected]