Kazakhstan opts for oil refinery upgrades, not new plant

Oct 1. Reuters. ALMATY

Kazakhstan opts for oil refinery upgrades, not new plantKazakhstan will rely on upgrading its three oil refineries, and not build a new one, to achieve self sufficiency in most oil products by 2016, Deputy Energy Minister Magzum Mirzagaliyev said on Wednesday.

It will continue to import fuel from Russia during the work. Kazakhstan is the second-largest post-Soviet oil producer after Russia, but struggles to meet rising energy consumption from an economy which grew by 6 percent last year.

Kazakhstan’s fuel deficit, covered in part by Russia which supplies duty-free some 30 percent of all fuel sold in the country, had earlier prompted the government to think about building the fourth refinery by 2019.

However, the ongoing upgrade of the existing three Soviet-era refineries will allow it to postpone the costly construction of a new refinery, said Mirzagaliyev.

“Once we have completed this upgrade in 2016, we will fully provide ourselves with oil products,” he told reporters on the sidelines of an international oil and gas conference. “Our estimates show that we won’t have a deficit of fuel until 2022-23.”

Kazakhstan processes annually 14.5 million tonnes of crude at its refineries. The government plans to boost refining to 17.5 million tonnes in 2016 to become self-sufficient in all oil products, except diesel.

“After 2022, we will probably begin to face a shortage of diesel fuel,” Mirzagaliyev said, adding the government would have to consider building the fourth refinery after that date.

“For the time being, we consider it more expedient to expand the capacity of the Shymkent refinery.”

The refinery, in southern Kazakhstan, is the country’s second largest. Launched in 1984, it processed 4.9 million tonnes of oil last year.

It is 50 percent owned by Kazakh state oil and gas company KazMunaiGas. The remaining half is held by PetroKazakhstan, a Kazakh-Chinese venture, in which KazMunaiGas has 30 percent.


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Stalled Kashagan hampers Kazakhstan’s oil output growth

Oct 1. Reuters. ALMATY

By Mariya Gordeyeva

* Kazakh oil output flat in 2014-15 as Kashagan stands idle
* Energy official affirms Kashagan will restart in 2016
* Says Tengiz now crucial to keep Kazakh oil output stable

Kazakhstan expects its oil production to stay around 2013 levels until 2016, when it hopes to restart the giant Kashagan oilfield halted by an industrial accident, a senior Kazakh official said on Wednesday.

The Central Asian nation aims to produce 81.8 million tonnes (1.64 million barrels per day) of crude this year, Deputy Energy Minister Magzum Mirzagaliyev told reporters on the sidelines of an international oil and gas conference.

“Next year production is expected to be at the 2014 level,” he added.

The second-largest ex-Soviet oil producer after Russia raised its oil output to 81.7 million tonnes last year from 79.2 million tonnes in 2012.

A further increase in production after the 3 percent rise last year has been thwarted by delays at the giant Kashagan oilfield in the Caspian Sea.

Kashagan, the world’s biggest oil find in recent decades, was launched in September last year after repeated delays and cost overruns. But its output was halted just a few weeks later after gas leaks were detected in its pipelines.

Now it is not expected to resume output before the first half of 2016. “The fact remains … that in any case production at Kashagan finally began, there is oil in the reservoir, and we hope that once we have replaced the pipelines, output will resume in 2016,” Mirzagaliyev said.

Official data show that Kazakhstan’s oil output edged down to 53.6 million tonnes in January-August this year from 54.0 million in the same period of 2013.

“We expect that we will be able to meet our production target (for 2014),” Mirzagaliyev said.

“Today we are looking for resources (to keep output stable). In particular, production at (the) Tengizchevroil venture is crucial,” he said.

Tengizchevroil (TCO), Kazakhstan’s largest producer, is a Chevron-led joint venture which operates the mammoth Tengiz onshore oilfield in the west of the country.

TCO is due to begin scheduled repair and maintenance work this month on the Tengiz field. A senior Kazakh energy official said in July the repair work was expected to last for 45 days.

“We expect that this planned repair work will be done in a fast tempo and we believe that we will achieve planned output there,” Mirzagaliyev said.

“Our latest data show that this repair may be conducted in just 23 to 28 days.”

Mirzagaliyev said TCO was forecast to produce “around 27 million tonnes” of oil this year.

Last year the joint venture produced a record 27.1 million tonnes, up from 24.2 million in 2012.

Chevron holds 50 percent of TCO, while Exxon Mobil owns 25 percent, Kazakh state oil company KazMunaiGas 20 percent and Lukarco, controlled by Lukoil, the remaining 5 percent.