New priorities

January 28. Kazpravda

By Kulpash Konyrova

New prioritiesKazakhstan has developed three main scenarios of oil extraction and intends to elaborate a new gas sector development strategy.

Yesterday in Astana at the expanded meeting of the oil and gas Ministry with Prime Minister Serik Akhmetov in attendance, the Government’s plans and efforts in oil and gas sector were discussed.

Minister Uzakbai Karabalin shared on the plans for 2014 and summed up the work in 2013. Thus, the oil production increased by more than 3% and reached about 82 million tons, the gas production grew by more than 5% and reached 42 billion cubic meters.

At present the goal is to increase production volumes. U. Karabalin said currently the ministry is considering three main scenarios of oil production: forced, cost-efficient and pragmatic.

– The most optimal is the third pragmatic scenario which is focused on gradual growth in oil production up to 100 million tons by 2020, up to 110-115 million tons by 2030 and stabilization of oil production in the 40-50s at the level of 110 million tons, – said the minister.

He explained that elaboration of the three scenarios is associated with the latest trends in the global oil and gas sector. According to the forecasts of the leading experts, despite the active development of renewable energy sources, the demand for oil will keep growing. Thus, according to the International Energy Agency, by 2035 oil demand in the world will increase from the current 4 billion to 5 billion tons per year.

– Thus, in the next 30 years, the price of Brent oil, even by the most conservative estimates, will reach 130-160 dollars per barrel, – the minister said.

As for gas, according to the world analysts, the demand for it will grow too. Today it is necessary to more clearly define how to use this kind of fuel rationally. Therefore the strategy for gas sector development in the country is required, – said U. Karabalin.

The minister also noted that the advanced technologies should be involved in subsoil development through creation of a favorable investment climate. Therefore, currently the ministry intends to define the reserves.

– We offer to introduce a specialized preliminary assessment of oil and gas fields that are put out to tender and to attract leading international consulting companies for that, – said the minister.

Such assessment would allow the state – the owner of the subsoil – to calculate the amount of resource rent. This step is required in the light of fulfillment of the ambitious project “Eurasia”, which will bring new discoveries in the Caspian Basin. Its implementation is possible due to the joint efforts of the leading international oil and gas companies.

Summing up the meeting, PM S. Akhmetov noted a stable growth of oil and gas sector in all major indicators such as production, refining and export. He named three significant events of 2013 in the domestic oil industry: the first – signing of the memorandum of understanding and cooperation between the Government and “TCO” in the frames of the project for TCO expansion; the second – signing of the intergovernmental agreement on cooperation in transportation of Russian oil to China; the third – commissioning of the gas pipeline Bozoi-Shymkent and opening of a bitumen plant in Mangystau region.

The Prime Minister also focused on the need to develop new approaches to the management of oil and gas sector and final defining of possible scenarios for oil and gas extraction.

– This is a major task that needs to be addressed comprehensively. It is important to involve all interested parties, the ministry and “KazMunaiGas” company, scientific organizations, large subsoil users in it, – said the Prime Minister.

S. Akhmetov underlined that implementation of new projects in oil and gas industry will increase demand for equipment and engineering products.

– It is necessary to assess the industry’s needs in engineering products, to open productions around large subsoil users, – S. Ahmetov instructed.

– Special attention should be paid to creation of decent working and living conditions and quality of food. These issues must be a priority for the leadership of the companies and the Government will closely monitor it, – said the PM.

Speaking about exploration and production of hydrocarbons, he focused on creation of equal conditions for all investors. Kazakhstan laws and regulations should be transparent and understandable for all companies, regardless of their country of origin.

The Prime Minister stressed that the future of the industry and Kazakhstan’s economy in general depend on implementation of these tasks.