Export or gas infrastructure development: how to divide natural gas of Kazakhstan?

As of today the level of provision of Kazakhstan population with gas is 50% or 9 millions people. Launching of «Sary-Arka» trunk gas pipeline will supply gas additionally to 2 millions people. However gas infrastructure development rate may have a negative impact on export potential of the Republic.

As of the end of 8 months of the current year 37,8 billions cubic meters of gas were produced in Kazakhstan. Whereas 22,3 billions of cubic meters of commercial gas were produced. “On the domestic market the stability of prices for gas is provided, unjustified increase is not allowed. Level of gas infrastructure development in the country achieved 50%, more than 9 millions of persons have access to gas”, – told Kanat Bozumbayev – the Minister of energy – at a recent meeting for oil and gas industry development. According to him more than 130 gas infrastructure development projects were realized over the last 10 years in the Republic. Around 100 more gas infrastructure construction projects will be realized in the regions in the period from 2019 to 2021 in the total amount of 92 billions of KZT. As a result the level of gas infrastructure development will exceed 61%.

Construction of  “Sary-Arka” trunk gas pipeline shall help to provide gradually 171 residential places of central and northern regions of the Republic including Nur-Sultan city with natural gas. As of the moment 778 km of gas pipeline have been welded, it is more than 70% of gas pipeline length.

In the meanwhile with growth of domestic consumption the gas export rate may significantly decrease. From 56 billions of cubic meters of gas produced in 2018 19 billions cubic meters were exported abroad.

And according to Kazakhstan president Kasym-Zhomart Tokayev “regardless of growth being forecast in production to 80 billions cubic meters by 2030 their may be shortage or absence of export volumes due to gas infrastructure and petroleum and gas chemistry development in the country”. Besides, large volumes of associated gas when producing crude oil are injected back to the layer. For example, Tengizchevroil (TCO) LLP annually injects back to the layer 3,2 billions cubic meters of gas. The positive aspect is than from 2006 to 2018 the volumes of gas being burnt are reduced four times.

Along with that as of today consumption of natural gas in the world is growing. By 2040 it will grow almost by 1,5 times and will be 5,5 trillions cubic meters. Share of gas among other energy sources will increase from today’s 23% to 26%. On the other hand oil share will decrease from 40 to 30 percent. In this situation Kazakhstan tries to diversify export of natural gas. “Beineu-Bozoy-Shymkent” gas pipeline has been already constructed, “Turkmenistan-Uzbekistan-Kazakhstan-China” gas transit corridor has been opened. Since 2018 gas supply to China started for the first time.

“In view of this we have to work out a possibility of increasing commercial gas production by means of implementation of modern technologies of  layer pressure increase”, – believes president Tokayev.

It is possible that one of methods for maintaining of  layer pressure will become injection of water instead of gas to the layer. For example, TCO realizes pilot-experimental project in order to increase oil production on Korolevskoye field. Injection of 5 thousands cubic meter of water from underground sources will allow to increase annual oil production rate here from 2 millions to 3 millions of tons.

Nevertheless the head of the state gave at the meeting the instruction to the government to update the concept of development of fuel and energy complex of the country with consideration of the above as well as of the need for creation of the shared gas market of the Eurasian Economic Union and preservation of energy supply security till the 1st of April 2020.