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Construction begins on Kazakhstan’s First Hybrid Power Plant

On July 16, Kazakhstan celebrated the launch of construction on a hybrid power plant in Zhanaozen, funded by national oil and gas company KazMunayGas (KMG) and Italian energy company Eni S.p.A., in its western region of Mangystau. According to KMG, the 247 MW hybrid project developed by Eni Plenitude will combine renewable energy sources -wind and solar - and a gas power plant to generate, balance and stabilize electricity production. The solar power plant will have a capacity of 50 MW; the wind power component, 77 MW, and the gas power plant,120 MW. By combing all three, the hybrid power plant will ensure a stable and reliable supply of electricity to KMG's regional subsidiary companies, including Ozenmunaygas and the Kazakh gas processing plant, and eliminate risks of shutdowns resulting from frequent interruptions to power supplies. Since approximately 40% of all electricity produced by the hybrid plant will be "green," the project will make a significant contribution to the implementation of KMG's decarbonization strategy by reducing its carbon footprint. Askhat Khassenov, Chairman of the Management Board of KazMunayGas, welcomed the initiative to provide Kazakhstan with its first hybrid plant and stated, "The project leverages Eni's international industrial experience and represents an innovative combination of various technologies. It also aims to diversify and decarbonize the energy supply in the Mangystau region. Additionally, the project will create new employment opportunities for highly skilled professionals in the region.” Present in Kazakhstan since 1992, Eni is a joint operator of the Karachaganak field, an equity partner in various projects in the Northern Caspian Sea, including the Kashagan offshore field, and KMG's partner in the exploration block Abay.

Oil & Gas

Four New Gas Processing Plants to be Commissioned in Kazakhstan

Four new gas processing plants will be gradually operated in Kazakhstan until 2030. According to the Ministry of Energy forecasts, the volume of marketable gas production in Kazakhstan will steadily grow from 22.5 billion cubic meters in 2023 to 36.6 billion cubic meters by 2030. To attract investment in the exploration and development of new gas fields, QazaqGaz and Chevron signed an agreement on joint implementation of geological exploration works at the Zhalibek area in the Aktobe region. The Road Map aims to increase the resource base of marketable gas. In 2023, the Rozhkovskoye, Urikhtau Vostochny, and Anabai fields, which have total recoverable gas reserves of 35.5 billion cubic meters, were put into commercial operation. Four gas processing plants are planned for commissioning from 2026 to 2030: two at the Kashagan field with annual capacities of 1 and 2.5 billion cubic meters (Qatari investor UCC Holding was involved), one at the Karachaganak field with a capacity of 4 billion cubic meters per year, and KazGPZ in Zhanaozen with a capacity of 900 mln cubic meters per year.

Oil & Gas

Kazakhstan to Increase Transit of Russian, Turkmen, and Uzbek Gas in 2024

At a government meeting on July 16, Kazakhstan's Minister of Energy, Almasadam Satkaliyev, reported using the country’s natural gas transit potential. The transit transportation of Russian natural gas to Uzbekistan was launched in October 2023, and 1.28 billion cubic meters were transported last year. Kazakhstan plans to increase the transit to 3.8 billion cubic meters, with an additional increase to 11 billion cubic meters annually. Turkmen and Uzbek natural gas transit to China has also shown steady growth. This year, Kazakhstan plans to increase this transit to 37.1 billion cubic meters (+1.5 billion cubic meters compared to last year). The minister added that the issue of increasing the transit of Russian natural gas to Kyrgyzstan is currently being discussed. The energy minister also reported that Kazakhstan plans to increase natural gas production by 2.3% compared to 2023 to 60.5 billion cubic meters this year. Most of the country’s natural gas is produced by three large fields — Karachaganak, Tengiz, and Kashagan. Marketable gas production will remain at last year's 29.8 billion cubic meters.

Oil & Gas

Energy Minister: Kazakhstan Needs Liquefied Gas For Petrochemical Industry

Kazakhstan’s Minister of Energy, Almasadam Satkaliyev, believes that liquefied petroleum gas (LPG) should primarily be used as a raw material for the country’s growing petrochemical industry, instead of its current widespread use as fuel for motor vehicles. “Liquefied petroleum gas is not used as [motor] fuel anywhere in the world. Instead, it is used as an important raw material for producing products with high added value,” Satkaliyev said at a government meeting on July 16, chaired by Prime Minister Olzhas Bektenov. Regarding data from the Ministry of Internal Affairs, Minister Satkaliyev said that in 2023, Kazakhstan had 582,000 motor vehicles running on LPG, an 18% increase compared to 2022 (491,000). Cheaper than gasoline, LPG is Kazakhstan's most popular and economical fuel for vehicle owners. The minister said that due to low prices for LPG, the country's motorists continue switching to this fuel type, thus increasing its consumption. Earlier reports said that in 2023, LPG consumption in Kazakhstan increased by 400,000 tons, or 28%, compared to 2022. Last year, LPG consumption volumes amounted to 2.2 million tons compared to 1.8 million tons in 2022. According to analysts, in 2024, LPG consumption in Kazakhstan may increase by another 200 thousand tons and reach 2.4 million tons. Satkaliyev continued by saying that the Energy Ministry had been allocating part of the LPG produced in Kazakhstan to industrial enterprises producing petrochemical products. Thus, there is a shortage of LPG, which stands at 20%—25%. According to the minister, Kazakhstan produced 1.6 million tons of LPG in 2023, and the projection for 2024 is the same: 1.6 million tons. The minister emphasized that three plants in Kazakhstan use LPG as a raw material for producing polypropylene and methyl tert-butyl ether. These projects have attracted $2.7 billion in investments and created 1.7 thousand jobs. Plans are in place for a project to produce butadiene, which will use butane from the Tengiz field as a raw material. The project will cost $1.4 billion and create 750 permanent jobs and up to 7,500 jobs in related industries. There are projects for the production of alkylate and polypropylene, which plan to invest $300 million and create 2 thousand jobs. The energy minister emphasized that implementing these important investment projects requires 345 thousand tons of LPG per year and asked the prime minister to ensure that the government prioritizes the use of LPG for the needs of the petrochemical industry.

Oil & Gas

Afghanistan Ready to Implement TAPI Project

The meeting of Turkmenistan's ambassador to Afghanistan, Khoji Ovezov, with Afghan Foreign Minister Amir Khan Muttaki in Kabul demonstrated specific dynamics in implementing the TAPI gas pipeline project. The news agency Alemarah reported the talks centered on the TAPI project and its advancement in Afghanistan. Diplomats discussed the possibility of increasing the pipeline's capacity, which could significantly increase the volume of Turkmen gas supplies to Pakistan and India. In addition to TAPI, the sides considered expanding transit and transportation connections through the Turgundi station and the joint electric power project of the Nurul Jihad substation in Herat province. The Afghan side assured determination to resolve the outstanding issues on the TAPI project and start actual work. "We are preparing all the necessary documents and starting preparations for construction," Amir Khan Muttaki said. The minister also noted the work being done to develop railroad facilities in the dry port of Turgundi and promised to update Turkmenistan soon. Taliban official Zabihullah Mujahid recently announced Afghanistan's readiness to develop the TAPI project further and cooperate with regional countries to create a North-South international transport corridor.

Oil & Gas

Kazakhstan Seeks to Increase Local Content in Oil and Gas Equipment Production

From July 10 to 12, the Kazakhstani city of Atyrau hosted the Oil and Gas Machine Building Forum. The Forum aimed to develop local content and support domestic manufacturers of oil and gas equipment and local suppliers of works and services for the sector. The event also included Open Doors Days for three major oil and gas operators in Kazakhstan: Tengizchevroil, North Caspian Operating Company, and Karachaganak Petroleum Operating B.V. As reported by the Kazakh Ministry of Energy, these three major subsoil users account for 70% of all oil and gas equipment purchases in Kazakhstan. Speaking at the Forum, Vice Minister of Energy Alibek Zhamauov said that both Kazakhstan’s president and prime minister outlined several specific tasks aimed at developing local content in the oil and gas sector. Particular attention, they said, should be paid to increasing the share of Kazakhstani goods, works and services in the sector’s purchases, creating new as well as modernizing existing production facilities, localizing the production of the most popular products in Kazakhstan, as well as moving design offices to the country, with the mandatory involvement of local engineers and design companies. Due to efforts of the Ministry of Energy, in May of this year contracts were signed between Tengizchevroil, North Caspian Operating Company, and Karachaganak Petroleum Operating B.V. and domestic manufacturers for the purchase of locally made oil and gas equipment worth $240 million. Speaking at the Forum, Leyla Gimranova, Deputy Director of the Project Department at Kazakh Invest, emphasized that oil and gas engineering could become a new growth point in developing domestic added-value production and import substitution. She said that last year, Kazakhstan produced oil and gas equipment for $72.7 million and imported such equipment for $1 billion. “This is a significant difference that needs to be reduced. Therefore, we are actively working to identify priority goods for import substitution, the production of which is possible based on existing domestic enterprises," Gimranova said.