ENERGY IN KAZAKHSTAN

Kazakhstan consumed a total of 2.8 quadrillion Btu of energy in 2012, with coal accounting for the largest share of energy consumed at 63 percent, followed by oil and natural gas at 18 percent and 16 percent, respectively. Kazakhstan is landlocked and is far from international oil markets. The lack of access to the open ocean makes the country dependent mainly on pipelines to transport its hydrocarbons to world markets. [Source: U.S. Energy Information Administration (EIA)]

Kazakhstan is one of the world’s top 20 oil producers. It has emerged as the biggest oil producer from oil rich Caspian Sea region and is expected to become one of the world's largest producers in the coming decade. Oil and gas from Kazakhstan are looked upon increasingly as alternatives to oil and gas from the volatile Middle East. Pipelines can carry energy sources directly for Kazakhstan to Europe and China.

Most of oil and gas deposits in Kazakhstan are concentrated in the western part of the country. Kazakhstan holds two thirds of the crude reserves in the Caspian Sea. Most of the Caspian Sea natural gas is in Turkmenistan. Under the Soviet Union, Kazakhstan’s oil deposits were scarcely explored. After the break up the Soviet Union, most of the develop was handled by the state. These days foreign companies such as Chevron Texaco and Exxon Mobile have large stakes in the development.

The Kazakhstan government maintains a virtual monopoly over energy industries. Despite being well endowed with energy resources, including abundant reserves of coal, oil, and natural gas, which made the republic one of the top energy-producing regions of the Soviet Union, Kazakhstan is a net importer of electricity, mainly from Russia. A major cause of the energy imbalance is an extremely high ratio of energy consumption to gross domestic product output. Reversal of energy dependency is a high priority of government economic policy. In the first half of 2006, electric power consumption increased by 4.3 percent over the same period of 2005, totaling 35.9 billion kilowatt-hours; in that period, production increased by 5.8 percent to 36.6 billion-kilowatt hours. Electricity imports from Russia (73 percent of the total) and Kyrgyzstan (27 percent) decreased by 39 percent between the first half of 2005 and 2006.[Source: Library of Congress, December, 2006 **]

Kazakhstan Industry in Kazakhstan is dominated by the energy sector. Between 1996 and 2005, the share of thermoelectric generation declined steadily, and the share of hydroelectric generation increased, reaching 12 percent in 2005. Kazakhstan has no operating nuclear power plants. Dependence on foreign suppliers has motivated a long-term plan to build 20 new generating plants, mainly hydroelectric, by 2015. The first such plant, Moinak on the Charyn River, would open in 2010. Other plants will go on the Chu, Ili, Irtysh, Syr Darya, and Talas rivers. With international assistance, the power distribution grid began a large-scale overhaul in the early 2000s, including a major new line connecting power plants in the north with centers of consumption in the south. The main fuel for thermoelectric power generation is coal from the Ekibastuz mines in the northeast.**

Because of an inefficient domestic delivery system and the failure to utilize natural gas obtained in oil extraction operations, Kazakhstan also imports natural gas from Uzbekistan, incurring power cuts when payments lag. In 2004 infrastructure improved sufficiently for domestic output to equal consumption, at the level of 16 billion cubic meters. In the first half of 2005, Kazakhstan became a net exporter of natural gas for the first time, as production continued to increase. **

Kazakhstan is a Caspian Sea littoral state. The legal status of the Caspian area remains unresolved, mainly driven by a lack of agreement on whether the Caspian is a sea or a lake. Until all states agree on a definition, legal status of the area will remain unresolved.

A) Total Primary Energy Production (2012): 6.221quadrillion Btu, 21st in the world. B) Total Primary Energy Consumption (2012): 2.769 quadrillion Btu, 32nd in the world. C) Primary Coal Production (2013) 132,167 thousand short tons, 9th in the world. D) Primary Coal Exports (2013): 36,049 thousand short tons, 8th in the world. E) Primary Coal Consumption (2013): 87,485 housand short tons, 11th in the world.

Carbon dioxide emissions from consumption of energy: 224.2 million Mt (2012 est.), country comparison to the world: 28. [Source: CIA World Factbook =]

Energy Sources in Kazakhstan: Oil, Natural Gas and Coal

Kazakhstan is a major oil producer. It has the second-largest oil reserves as well as the second-largest oil production among the former Soviet republics after Russia. The country's estimated total petroleum and other liquids production was 1.70 million barrels per day in 2014. The key to its continued growth in liquids production from this level will be the development of its giant Tengiz, Karachaganak, and Kashagan fields. Development of additional export capacity will also be necessary for production growth. [Source: U.S. Energy Information Administration (EIA) ]

Although Kazakhstan became an oil producer in 1911, its production did not increase to a meaningful level until the 1960s and 1970s, when production plateaued at nearly 500,000 barrels a day , a pre-Soviet independence record production level. Since the mid-1990s and with the help of major international oil companies, Kazakhstan's production first exceeded 1 million barrels a day in 2003.

Rising natural gas production over the past decade has boosted oil recovery (as a significant volume of natural gas is reinjected into oil reservoirs) and decreased Kazakhstan's reliance on natural gas imports. Natural gas consumption, however, has been stagnant as the infrastructure and expense required to connect Kazakhstan's widely dispersed population to production centers in the country's northwest has impeded development.

Kazakhstan produces over 100 million tons of coal annually. There are large deposits around Qaraghandy and Ekitastuz. The world's tallest chimney (1,377 feet) is at coal plant No. 2 in Ekibastuz, Kazakhstan. The main sources of coal-generated electricity are the fields of Ekibastuz, Maykubin, Torghay, and Borlin. There are three large hydroelectric stations, at Bukhtarmin, Öskemen, and Kapchagay. The republic's one nuclear power station is located near the city of Aqtau.[Source: Library of Congress, March 1996 *]

Kazakhstan had 37,038 million short tons (MMst) of total recoverable coal reserves in 2011. It is in the top ten countries in the world in terms of coal reserves, coal production, and coal exports. It is also 12th in the world in terms of coal consumption. Despite being among the top coal countries, Kazakhstan is a relatively small contributor to global coal volumes. The top three countries globally account for disproportionate shares of total global coal reserves, production, consumption, and exports (between 60 percent and 70 percent combined), while Kazakhstan accounts for between 1 percent and 4 percent.

Plans call for development of an ethanol industry to supplement conventional fuels, using grain from the agricultural region of northern Kazakhstan. Kazakhstan would be a member of the Asian Energy Club, which Russia proposed in 2006 to unify oil, gas, and electricity producers, consumers, and transit countries in the Central Asian region in a bloc that is self-sufficient in energy. Other members would be China, Kyrgyzstan, Tajikistan, and Uzbekistan. [Source: Library of Congress, December, 2006 **]

Fuel Supply and Consumption in Kazakhstan in the 1990s

The energy ministry said that last year Kazakhstan imported 644 GWh and exported 2.9 TWh of electricity. Power production increased by 2.1 percent to 93.9 TWh, while demand stood at 91.6 TWh. Coal accounted for 73 percent of power generation, while gas, wind, renewable energy, including small hydro power, covered 18 percent, 8 percent and 0.6 percent, respectively. Kazakhstan plans to increase the share of electricity it produces from renewable sources to 3 percent in 2020, 10 percent in 2030 and 50 percent in 2050. [Source: World Nuclear News, January 26, 2015]

In 1993 Kazakhstan was the second largest oil producer, third largest coal producer, and sixth largest natural gas producer among the former Soviet republics. In 1994 electric power generation accounted for 19 percent of GDP, and fuel extraction and processing accounted for nearly 23 percent. Thus, the national economy is strongly affected by changes in levels of fuel extraction and energy production. [Source: Library of Congress, March 1996 *]

Despite its fuel endowments, Kazakhstan remained a net importer of energy, partly because of falling production in the early 1990s and partly because of remaining barter agreements from the Soviet era. Undeveloped east-to-west transportation infrastructure prevented efficient supply of domestic fuels to industries, which were energy intensive. As a consequence, Kazakhstan had to import oil, natural gas, lubricating oil, gasoline, and diesel fuel from Russia, which in the postindependence years took advantage of its neighbor's vulnerability to economic pressure. In the mid-1990s, the oil exchange system between Kazakhstan and Russia meant that declining demand in Russia reduced availability of those Russian products to Kazakhstan. In 1994 Russia sent only 40 percent of the crude oil and 48 percent of the refined products prescribed in the bilateral agreement for that year. Gas imports showed a similar drop. *

In 1991 Kazakhstan consumed 101.6 billion kilowatt-hours of electricity (84.7 percent of which was produced domestically), making it a relatively heavy energy consumer among nations of its economic stature. About 85 percent of domestic generation occurs in coal-fired thermoelectric plants. A few thermoelectric plants use natural gas or oil; the remaining 15 percent of energy comes from those plants and from hydroelectric stations. *

The deposits of oil and gas promised great wealth. Over $12 billion in foreign investment flowed into Kazakhstan the ten years following independence in 1991. Almost $5 billion alone from oil sales flowed in in 2000. [Source: National Geographic, 2002]

In 2019, a single energy market within the Eurasian Economic Community (EAEC) is expected to be created. The EAEC, which originated from the Commonwealth of Independent States on 29 March 1996, was terminated from 1 January 2015 and effectively replaced with the launch of the Eurasian Economic Union. [Source: World Nuclear News, January 26, 2015]

Electricity in Kazakhstan

The national electric power system is divided into three grids. The northern grid, which serves a large part of heavy industry, is connected to the adjacent Siberian grid in Russia, and the southern grid is connected to the Central Asian System. Kazakhstan depends on Russia for electricity and fuel. Although the Siberian generating stations that supply the northern grid are located in Russia, they are fired largely by coal exported from Kazakhstan. Some electric power also is received from Kyrgyzstan's hydroelectric stations to the south in exchange for coal. [Source: Library of Congress, March 1996 *]

Most of Kazakhstan's power generation comes from coal-fired power plants, concentrated in the north of the country near the coal-producing regions. Kazakhstan's total installed generating capacity was approximately 17.8 gigawatts (GW) at the end of 2012, 87 percent of which was fossil fuel-fired, 13 percent was hydropower, and less than 1 percent was other renewables. Kazakhstan's total net generation in 2012 was approximately 86.1 billion kilowatthours (kWh) of electricity. [Source: U.S. Energy Information Administration (EIA) ]

Kazakhstan's only nuclear power plant, a BN-350 nuclear reactor at Mangyshlak, was decommissioned in 2001. Kazakhstan has some of the largest uranium deposits in the world and is the world's largest uranium producer.17 Although plans have long existed to build additional nuclear power plants, there has been little progress on constructing these units.

Kazakhstan's national grid is operated by the Kazakhstan's Electricity Grid Operating Company, a state-owned company. It is responsible for electric transmission and network management. There are 15 regional electricity distribution companies, a number of which are privately owned. The electricity transmission and distribution sectors are considered to be natural monopolies and are regulated by the government, however, wholesale generation of power is considered to be a competitive market with most generation assets owned by private enterprises.

Electricity - production:90.53 billion kWh (2012 est.), country comparison to the world: 35. Electricity - consumption: 76.21 billion kWh (2011 est.), country comparison to the world: 38. Electricity - exports: 1.809 billion kWh (2011 est.), country comparison to the world: 46. Electricity - imports: 2.6 billion kWh (2011 est.), country comparison to the world: 56. [Source: CIA World Factbook =]

Electricity - installed generating capacity: 18.75 million kW (2011 est.), country comparison to the world: 42, Electricity - from fossil fuels: 88.1 percent of total installed capacity (2011 est.) country comparison to the world: 82. Electricity - from nuclear fuels: 0 percent of total installed capacity (2011 est.), country comparison to the world: 122, Electricity - from hydroelectric plants: 11.9 percent of total installed capacity (2011 est.), country comparison to the world: 111 Electricity - from other renewable sources: 0 percent of total installed capacity (2011 est.), country comparison to the world: 192. =

Natural Gas in Kazakhstan

Kazakhstan's largest petroleum liquids fields also contain substantial volumes of natural gas, most of which is reinjected into oil wells to improve oil recovery rates. OGJ estimated Kazakhstan's proven natural gas reserves at 85 trillion cubic feet (Tcf) as of January 1, 2014.14 The majority of Kazakhstan's gas reserves are in crude or condensate-rich fields. The two largest petroleum liquids fields, Karachaganak and Tengiz, are also the two largest natural gas fields.

Natural gas - proved reserves: 2.407 trillion cu meters (1 January 2014 est.), country comparison to the world: 15. Natural gas - production: 11.79 billion cu meters (2012 est.), country comparison to the world: 40. Natural gas - consumption: 10.95 billion cu meters (2012 est.), country comparison to the world: 45. Natural gas - exports: 11.37 billion cu meters (2012 est.), country comparison to the world: 17. Natural gas - imports: 10.53 billion cu meters (2012 est.), country comparison to the world: 22. [Source: CIA World Factbook =]

Kazakhstan has enormous reserves of natural gas, most notably the giant Karachaganak field in the northwest near the Russian border. The site was developed by a consortium of Agip of Italy, British Gas, and the Russian Natural Gas Company (Gazprom). Large natural gas reserves also lie in the eastern Caspian Sea, mostly in Turkmenistan's territory.

See Pipelines

Natural Gas Production in Kazakhstan

Over the past decade, annual gross natural gas production almost tripled, from 0.6 Tcf in 2003 to 1.6 Tcf in 2012. Reinjected natural gas has accounted for most of the increase in gross production, while dry natural gas production has remained relatively stable. In 2012, reinjected natural gas production was more than double dry natural gas production. [Source: U.S. Energy Information Administration (EIA) ]

In 2013, the Karachaganak and Tengiz fields combined accounted for more than 90 percent of Kazakhstan's raw marketed natural gas production. The Tengiz project includes a gas processing plant, which according to Chevron produced 251 billion cubic feet (Bcf) of dry marketed natural gas in 2013 that was sold to local consumers. The Karachaganak project has insufficient gas processing capacity. Most of the raw marketed production from the Karachaganak field has to be exported to Russia to be processed at a gas processing plant in Orenberg. In 2013, about 30 percent of this processed gas was sold in Russia, with the remainder of the dry gas returned to Kazakhstan to help meet local demand. The next phase of development at Karachaganak originally included plans for facilities to process its own gas and boost dry natural gas supplies to consumers within Kazakhstan. However, the project developers have since changed their plans, and gas produced under Karachaganak's next expansion will largely be reinjected into the field to boost liquids recovery.

When it comes online, the first phase of the Kashagan project is expected to marginally boost supplies of dry gas to consumers in Kazakhstan. However, like the Karachaganak and Tengiz projects, much of the gas produced from Kashagan will be either reinjected into the well to boost liquids recovery or used at the project site to produce electricity.

In 1992 natural gas production was 8.5 million cubic meters, half of which came from Karachaganak. By 1994, however, production was only 4.1 million cubic meters because Russian consumption had dropped drastically in the early 1990s. A 1995 deal with Gazprom gave that organization part ownership of Karachaganak in exchange for a guaranteed purchase of natural gas from Kazakhstan. Foreign investment projects at Tengiz and Karachaganak were expected to triple domestic gas output and enhance gas processing capabilities in the later 1990s. [Source: Library of Congress, March 1996 *]

Natural Gas Pipelines in Kazakhstan

Kazakhstan has two major export pipelines for natural gas. 1) The Central Asia Centre pipeline (CAC), which traverses the western edge of Kazakhstan on its way to Russia and points further west, and 2) the Turkmenistan-China pipeline, which traverses the southern edge of the country on its way to China. Both pipelines are part of the regional Caspian export infrastructure and mainly carry natural gas exports from Turkmenistan, along with smaller but still significant volumes of exports from Kazakhstan and Uzbekistan. The CAC pipeline also serves local natural gas demand in western Kazakhstan, including northwestern Kazakhstan where most of the country's production is located. A third major pipeline, the Bukhara-Tashkent-Bishkek-Almaty pipeline serves local demand in southern Kazakhstan with imported gas from Turkmenistan and Uzbekistan. Two of Kazakhstan's three underground gas storage facilities are located along this pipeline. [Source: U.S. Energy Information Administration (EIA) ]

The domestic pipeline system in Kazakhstan is underdeveloped. Natural gas production in the country is concentrated in the northwest and is not connected to population centers in the south, north, center, and east. A government objective is to develop a domestic natural gas system that would connect the country's producing and consuming areas. Kazakhstan is already on its way to meeting the first part of this challenge, connecting the existing gas pipeline infrastructure in the West to the existing infrastructure in the densely-populated South. The Beineu-Bozoi-Shymkent pipeline is under construction and is expected to be completed by the end of 2015 with a capacity of approximately 350 Bcf per year. This pipeline will allow Kazakhstan to gasify communities along the route of the pipeline that previously had no access to gas. It will also connect to the existing pipeline serving southern Kazakhstan, replacing imported natural gas in those markets. Finally, it will connect to the pipeline to China, allowing production from northwestern Kazakhstan to be exported to China.

Plans for gasifying other parts of the country and connecting them to the existing infrastructure in the West and South are more uncertain. The vast distances and relatively low population density in the north, center, and east make the economics challenging for any potential gas pipeline projects to serve the region.

Coal in Kazakhstan

In 2012, coal accounted for 63 percent of Kazakhstan's total energy consumption. Kazakhstan had 37,038 million short tons (MMst) of total recoverable coal reserves in 2011. It is in the top ten countries in the world in terms of coal reserves, coal production, and coal exports. It is also 12th in the world in terms of coal consumption. Despite being among the top coal countries, Kazakhstan is a relatively small contributor to global coal volumes. The top three countries globally account for disproportionate shares of total global coal reserves, production, consumption, and exports (between 60 percent and 70 percent combined), while Kazakhstan accounts for between 1 percent and 4 percent. [Source: U.S. Energy Information Administration (EIA) ]

In the 1990s the coal industry was plagued by poor management and strikes that shut down major underground operations at Qaraghandy and surface operations at Ekibastuz in 1994 and 1995. The large metallurgical works of Qaraghandy, built under the Soviet concept of the territorial-industrial complex combining heavy industry with on-site fuel reserves, was forced to curtail production when strikes are called. [Source: Library of Congress, March 1996 *]

The American multinational energy company AES spent $200 million for one of the world’s largest coal-fired electricity-generating plants. The company had a hard time making a profit because of the government policy to keep energy prices artificially low because people in Kazakhstan were so poor they could not afford market prices for. AES could not convince the government to raise energy prices even though they were among the lowest in the world, AES was not a newcomer to the developing world. It operates plants in Tanzania, Columbia and India. To survive in Kazakhstan it has learned to barter with customers for thing like vodka, eggs and cars.

Kazakhstan Coal Production and Exports

A) Primary Coal Production (2013) 132,167 thousand short tons, 9th in the world. B) Primary Coal Exports (2013): 36,049 thousand short tons, 8th in the world. C) Primary Coal Consumption (2013): 87,485 housand short tons, 11th in the world. [Source: U.S. Energy Information Administration (EIA) ]

About a quarter of Kazakhstan's coal production is exported, with most of that going to Russia. All of Kazakhstan's coal exports and most of its production consist of steam coal, suitable for burning in electric power plants or in other applications to generate steam and heat. Kazakhstan also produces smaller quantities of metallurgical coal that are consumed domestically. Kazakhstan is rich in a variety of minerals, with mineral and coal deposits concentrated in the north and center of the country. Coal is a major energy source for the mining and smelting industries and for the electricity sector in Kazakhstan.

In 1994 coal production decreased 6.7 percent to 104.4 million tons, after a production peak of 140 million tons was reached in 1991. About thirty major coalfields exist, most of them within 400 kilometers of Qaraghandy in north-central Kazakhstan. This region offers some of the most accessible and cheaply extracted coal in the CIS; however, most of Kazakhstan's coal is high in ash. The largest open-pit mines are located in the Ekibastuz Basin northeast of Qaraghandy. According to estimates, presently exploited mines contain 100 years of coal reserves at today's rate of consumption. Coal is a key input for industry; in the early 1990s, more than 75 percent of coal consumption in Kazakhstan went to thermoelectric stations for power generation, and another 14 percent went to the steel industry. In the early 1990s, Kazakhstan exported about 40 percent of its coal to CIS customers, mainly Russia. [Source: Library of Congress, March 1996 *]

Mine Explosion Kills 23 in Kazakhstan

In December 2004, 23 people were killed and three others were injured in an explosion on coal mine in the central Karagand region of Kazakhstan. Eighty-seven miners were working at the time of the explosion in the mine, which is located near the town of Shakhtinsk, about 200 kilometers south of Astana.

Associated Press: Two injured miners were hospitalized and a third was released after treatment, he said. President Nursultan Nazarbayev sent a letter of condolence to the families of the victims and ordered the government to pay them compensation, as well as carry out a full investigation, officials said. [Source: Associated Press, December 5, 2004]

Sadykanov said a special commission was investigating the cause of the blast. Rescue operations were complete and work had started on restoring the mine, which is owned by Kazakhstan's ISPAT-Karmet metal giant, said Nakyp Kapbasov, deputy regional emergencies agency chief. At least eight other people have died in mining accidents in the central industrial Karaganda region this year.

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, U.S. government, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.

Last updated April 2016