This year in Kazakhstan we are planning to produce 75 million tons that is 5 million tons more than in the last year. This is owing to large companies, such as TCO, CNPC-AMG, MMG, and Kazakhoil-Aktobe, which have added to this growth.
The volume of processing is expected to increase slightly this year to 12.5 million tons, compared to the last year’s indicators. Thus, the major volume of oil will go for export. In connection with the said, I would like to turn your attention to reviewing the export routes for transportation of Kazakhstani hydrocarbons.
Besides, there is one more important direction we pay special attention to. This is the petrochemical sector development, but this issue deserves special attention. Kazakhstani oil export routes
KCTS
Currently, the National Company KazMunayGas is carrying out work to set up the Kazakhstan Caspian Transportation System (KCTS). It is intended for the export of the increasing volumes of Kazakhstani oil, which will be produced, first of all, at the Kashagan and Tengiz oilfields, for its transportation through the Caspian Sea to external markets over the Baku-Tbilisi-Ceyhan pipeline system and other oil transportation systems, located in Azerbaijan. The KCTS comprises the Yeskene-Kuryk pipeline and the Trans-Caspian system (the terminals at the Kazakhstani and Azerbaijan seashore of the Caspian Sea, tankers and vessels, connecting facilities, providing access to the BTC system). Its throughput capacity at the initial stage of operation is expected at 23 million tons a year with the subsequent increase to 35-56 million tons a year). The putting into operation is planned by the time of commercial production starting at Kashagan in 2012-2013.
Yeskene-Kuryk
Concerning this pipeline, KMG started developing its feasibility study at the end of 2008. The customer of the project is KazTransOil, while the developer is German engineering firm ILF. At present, the feasibility study development is at the completion stage. According to the preliminary feasibility study results, the project parameters are set: The length of the pipeline will be 726km, the pipe diameter 44″/1,100mm, and 4 pumping stations for the full capacity operation stage.
International petroleum companies as the participants of the North Caspian and Tengiz projects are interested in implementation of the Yeskene-Kuryk oil pipeline project. By order of the government, KMG is carrying on negotiations with potential consignors of goods, who expressed their wish to have a participating interest in the Yeskene-Kuryk pipeline construction project that will be part of the KCTS. The parties to the negotiations are working now on the MoU, the key issues of which are the provision of guarantees as to the oil transportation volumes, participating interests, right to access to, and distribution of the facilities to be constructed, price-making, and tax-related issues.
Trans-Caspian project
President of Kazakhstan Nursultan Nazarbayev signed the relevant law on the Trans-Caspian project on May 28, 2008. On November 14, 2008 KMG and SOCAR entered into an agreement on basic principles of the Trans-Caspian project implementation. The signed agreement provides for major conditions and principles of joint implementation of the Trans-Caspian project, setting up of a joint project company, issues of financing and price-making, conditions of access to the facilities to be constructed, and stage-by-stage development of the Trans-Caspian system.
CPC
The length of the given pipeline is 1,510km. It connects Kazakhstan Tengiz and the oil-loading terminal near the seaport of Novorossiysk at the Black Sea. In December of 2008 certain principles of the Memorandum that provides for implementation in 2009 of a number of events were approved, this required for extension of the pipeline throughput capacity, including the renewal of the design estimates, amendment of the existing contracts, and etc.
On April 23, 2009 KMG completed a transaction on the buying out of BP’s share in the joint venture Kazakhstan Pipeline Ventures LLC.
Regarding the selling of its share in Lucarco B.V., the BP Company is carrying on negotiations with the second participant of the given joint venture, the LUKOIL Company. The negotiation process over the CPC extension project is still in progress.
Kazakhstan-China oil pipeline
The Kazakhstan-China oil pipeline construction was supposed to be done in two stages. The first stage of it was the implementation of the Atasu-Alashan’kou oil pipeline project. For implementation of the second stage of it, the relevant agreement was signed between CNPC and KMG on the major principles of the Kazakhstan-China oil pipeline construction II Phase in the course of the official visit of the Kazakhstani President to the People’s Republic of China on December 20, 2006.
The first line of the Kazakhstan-China oil pipeline construction II Phase is the Kenkiyak-Kumkol pipeline part, the construction of which is being carried out on a parity basis with the Chinese side by LLC Kazakhstan-China Pipeline. The throughput capacity of the pipeline will be 20 million tons of oil a year. Of them, the first phase provides for only 10 million tons a year. The completion of construction of the Kenkiyak-Kumkol is scheduled for 2009.
Concerning natural gas, it becomes the more prospective energy carrier for Kazakhstan. In the last few years the production of natural gas in the country is marked by a steady upward trend. Based on the current year’s results, the sour gas production in Kazakhstan is expected at 36.9 bcm.
Petrochemical sector
As I already told, the petrochemical sector development is a very important matter. By now, the MEMR, KMG, LLC Kazakhstan Petrochemical Industries, and some petrochemical enterprises have developed three inter-related investment projects of petrochemical productions of the world level:
The above investment projects provides for the state-and-private partnership.
Integrated gas-and-chemical production
The plant is the major facility, producing petrochemical raw material for other petrochemical productions. The project operator is LLC Kazakhstan Petrochemical Industries Inc.; the value of project is US$6.3 billion. The project participants are KMG E&P (51%), LyondellBasell (24.5%), and the SAT&Company (24.5%).
The government took a resolution to provide support in preparation of the required infrastructure, the construction of which in 2008-2011 will be financed from the budget. In particular, KZT10 billion of credit resources was allocated in 2008 for these purposes.
The project management company, Foster Wheeler, started engineering and survey operations in March of 2008 in the area of future location of the project facilities. All bids documentation to select the general contractor for design, supply of equipment, and construction of the facility on a turnkey basis, is developed.
The preliminary feasibility study of the project was prepared by Shell Global Solutions Int., the detailed one by English Foster Wheeler (UK). Jacobs Consultants had carried out the marketing study and developed the marketing plan.
The negotiations are in progress with the petrochemical companies SABIC and LG Chemical as to the participation in the project. In particular, LG Chem has already forwarded a letter with the condition of 50% participation in the project of the Korean side, and before the end of this year we will take final decision on the cooperation matter.
Under the marketing strategy developed by Jacobs Consultants, the major volume of output produced by the plant (80%, polyethylene and polypropylene of various grades) will be supplied to Western Europe and Central and South Asia.
There are some other investment projects, which are at the phase of examination and development by now. These are:
Methanol producing plant construction
Methanol, the basic petrochemical product, will be produced in the amount of 1,700,000 t/g from dry gas supplied from the Western Kazakhstan gas deposits (1.8bcm to 2.0bcm a year). Also, the target is to produce 490,000 tons of polypropylene and 180,000 tons of gasoline fractions a year. The plant, which is supposed to be built near Zhanaozen’ in Mangistau Oblast, is estimated at US$3 billion.
Petrochemical production on the basis of benzene and paraxylene
The raw material for the given petrochemical plant, which is supposed to produce 179,000 tons of ethyl benzene, 100,000 tons of polyethylene teraphthalate (PET), and 100,000 tons of polyvinyl chloride, will be ethylene, benzene, and paraxylene. The plant construction is estimated at US$2 billion, and it is planned being constructed either on the Atyrau chemical plant territory, or near the Karabatan station in Atyrau Oblast.
Diversification of the Aktau plastic mass producing plant
The purpose of the given project is to renew the polystyrene production. The raw material for it will be ethyl benzene (179,000 tons), while the plans are to produce 155,000 tons of polystyrene a year. The cost of the project is US$500 million.
The volume of processing is expected to increase slightly this year to 12.5 million tons, compared to the last year’s indicators. Thus, the major volume of oil will go for export. In connection with the said, I would like to turn your attention to reviewing the export routes for transportation of Kazakhstani hydrocarbons.
Besides, there is one more important direction we pay special attention to. This is the petrochemical sector development, but this issue deserves special attention. Kazakhstani oil export routes
KCTS
Currently, the National Company KazMunayGas is carrying out work to set up the Kazakhstan Caspian Transportation System (KCTS). It is intended for the export of the increasing volumes of Kazakhstani oil, which will be produced, first of all, at the Kashagan and Tengiz oilfields, for its transportation through the Caspian Sea to external markets over the Baku-Tbilisi-Ceyhan pipeline system and other oil transportation systems, located in Azerbaijan. The KCTS comprises the Yeskene-Kuryk pipeline and the Trans-Caspian system (the terminals at the Kazakhstani and Azerbaijan seashore of the Caspian Sea, tankers and vessels, connecting facilities, providing access to the BTC system). Its throughput capacity at the initial stage of operation is expected at 23 million tons a year with the subsequent increase to 35-56 million tons a year). The putting into operation is planned by the time of commercial production starting at Kashagan in 2012-2013.
Yeskene-Kuryk
Concerning this pipeline, KMG started developing its feasibility study at the end of 2008. The customer of the project is KazTransOil, while the developer is German engineering firm ILF. At present, the feasibility study development is at the completion stage. According to the preliminary feasibility study results, the project parameters are set: The length of the pipeline will be 726km, the pipe diameter 44″/1,100mm, and 4 pumping stations for the full capacity operation stage.
International petroleum companies as the participants of the North Caspian and Tengiz projects are interested in implementation of the Yeskene-Kuryk oil pipeline project. By order of the government, KMG is carrying on negotiations with potential consignors of goods, who expressed their wish to have a participating interest in the Yeskene-Kuryk pipeline construction project that will be part of the KCTS. The parties to the negotiations are working now on the MoU, the key issues of which are the provision of guarantees as to the oil transportation volumes, participating interests, right to access to, and distribution of the facilities to be constructed, price-making, and tax-related issues.
Trans-Caspian project
President of Kazakhstan Nursultan Nazarbayev signed the relevant law on the Trans-Caspian project on May 28, 2008. On November 14, 2008 KMG and SOCAR entered into an agreement on basic principles of the Trans-Caspian project implementation. The signed agreement provides for major conditions and principles of joint implementation of the Trans-Caspian project, setting up of a joint project company, issues of financing and price-making, conditions of access to the facilities to be constructed, and stage-by-stage development of the Trans-Caspian system.
CPC
The length of the given pipeline is 1,510km. It connects Kazakhstan Tengiz and the oil-loading terminal near the seaport of Novorossiysk at the Black Sea. In December of 2008 certain principles of the Memorandum that provides for implementation in 2009 of a number of events were approved, this required for extension of the pipeline throughput capacity, including the renewal of the design estimates, amendment of the existing contracts, and etc.
On April 23, 2009 KMG completed a transaction on the buying out of BP’s share in the joint venture Kazakhstan Pipeline Ventures LLC.
Regarding the selling of its share in Lucarco B.V., the BP Company is carrying on negotiations with the second participant of the given joint venture, the LUKOIL Company. The negotiation process over the CPC extension project is still in progress.
Kazakhstan-China oil pipeline
The Kazakhstan-China oil pipeline construction was supposed to be done in two stages. The first stage of it was the implementation of the Atasu-Alashan’kou oil pipeline project. For implementation of the second stage of it, the relevant agreement was signed between CNPC and KMG on the major principles of the Kazakhstan-China oil pipeline construction II Phase in the course of the official visit of the Kazakhstani President to the People’s Republic of China on December 20, 2006.
The first line of the Kazakhstan-China oil pipeline construction II Phase is the Kenkiyak-Kumkol pipeline part, the construction of which is being carried out on a parity basis with the Chinese side by LLC Kazakhstan-China Pipeline. The throughput capacity of the pipeline will be 20 million tons of oil a year. Of them, the first phase provides for only 10 million tons a year. The completion of construction of the Kenkiyak-Kumkol is scheduled for 2009.
Concerning natural gas, it becomes the more prospective energy carrier for Kazakhstan. In the last few years the production of natural gas in the country is marked by a steady upward trend. Based on the current year’s results, the sour gas production in Kazakhstan is expected at 36.9 bcm.
Petrochemical sector
As I already told, the petrochemical sector development is a very important matter. By now, the MEMR, KMG, LLC Kazakhstan Petrochemical Industries, and some petrochemical enterprises have developed three inter-related investment projects of petrochemical productions of the world level:
- Integrated gas-and-chemical production in Atyrau to produce polyethylene (800,000 t/g) and polypropylene (450,000 t/g), the construction of which is scheduled for 2009-2014;
- Aromatic hydrocarbons producing production at the Atyrau oil refinery, which will allow producing 133,000 tons of benzene and 496,000 tons of paraxylene a year. Its construction is scheduled for 2009-2013. The Marubeni Company is currently examining the possibility of joint implementation and management of the project (PMC).
- Aktau-based road bitumen production at the Aktau plastic mass producing plant in the amount of 500,000 t/g of road bitumen of three grades, good to the climatic condition of southern, central and northern regions of Kazakhstan. The value of the project is US$317 million. The term of implementation of the project is the year 2011. The proposals are received from CITIC Group and Marubeni as to the participation in the project.
The above investment projects provides for the state-and-private partnership.
Integrated gas-and-chemical production
The plant is the major facility, producing petrochemical raw material for other petrochemical productions. The project operator is LLC Kazakhstan Petrochemical Industries Inc.; the value of project is US$6.3 billion. The project participants are KMG E&P (51%), LyondellBasell (24.5%), and the SAT&Company (24.5%).
The government took a resolution to provide support in preparation of the required infrastructure, the construction of which in 2008-2011 will be financed from the budget. In particular, KZT10 billion of credit resources was allocated in 2008 for these purposes.
The project management company, Foster Wheeler, started engineering and survey operations in March of 2008 in the area of future location of the project facilities. All bids documentation to select the general contractor for design, supply of equipment, and construction of the facility on a turnkey basis, is developed.
The preliminary feasibility study of the project was prepared by Shell Global Solutions Int., the detailed one by English Foster Wheeler (UK). Jacobs Consultants had carried out the marketing study and developed the marketing plan.
The negotiations are in progress with the petrochemical companies SABIC and LG Chemical as to the participation in the project. In particular, LG Chem has already forwarded a letter with the condition of 50% participation in the project of the Korean side, and before the end of this year we will take final decision on the cooperation matter.
Under the marketing strategy developed by Jacobs Consultants, the major volume of output produced by the plant (80%, polyethylene and polypropylene of various grades) will be supplied to Western Europe and Central and South Asia.
There are some other investment projects, which are at the phase of examination and development by now. These are:
Methanol producing plant construction
Methanol, the basic petrochemical product, will be produced in the amount of 1,700,000 t/g from dry gas supplied from the Western Kazakhstan gas deposits (1.8bcm to 2.0bcm a year). Also, the target is to produce 490,000 tons of polypropylene and 180,000 tons of gasoline fractions a year. The plant, which is supposed to be built near Zhanaozen’ in Mangistau Oblast, is estimated at US$3 billion.
Petrochemical production on the basis of benzene and paraxylene
The raw material for the given petrochemical plant, which is supposed to produce 179,000 tons of ethyl benzene, 100,000 tons of polyethylene teraphthalate (PET), and 100,000 tons of polyvinyl chloride, will be ethylene, benzene, and paraxylene. The plant construction is estimated at US$2 billion, and it is planned being constructed either on the Atyrau chemical plant territory, or near the Karabatan station in Atyrau Oblast.
Diversification of the Aktau plastic mass producing plant
The purpose of the given project is to renew the polystyrene production. The raw material for it will be ethyl benzene (179,000 tons), while the plans are to produce 155,000 tons of polystyrene a year. The cost of the project is US$500 million.
Date:
Monday, November 2, 2009
