This year turned out to be very rich in interesting and important news. Therefore, on New Year’s Eve, Petrocouncil presents an overview of events in the energy industry of Kazakhstan for 2023. Moreover, our followers helped us compile this review – for each event we initiated a poll on our Telegram channel and the review included those nominees and events that received the most votes.
Event of the year
54% of our followers named the main event of the year as ‘The use of alternative routes for the supply of Kazakh hydrocarbons for export.’ The launch of the Trans-Caspian route for domestic oil became an important event in the industry. KMG and SOCAR entered into a 5-year agreement on the transit of oil along the Aktau – Baku – Ceyhan route in the amount of 1.5 million tons per year with a further increase to 5 million tons per year.
In 2023, the CPC pipeline remained the main route for transporting Kazakh oil. CPC accounted for over 80% of oil exports in the past year; it passes through Russian territory.
Due to various incidents in the port of Novorossiysk, the shipment of Kazakh oil in 2023 was suspended several times. Production at the fields decreased. To minimize the risks from the current situation, President of Kazakhstan initiated the diversification of routes. In particular, the Trans-Caspian International Transport Route which passes through the Caspian Sea and then through the Baku-Tbilisi-Ceyhan pipeline.
Emergency of the year
80% of subscribers thought that the explosion at the Kostenko mine was the most dangerous emergency incident of the year. On the night of October 28, 2023, an explosion and fire occurred at the Kostenko mine in the Karaganda region. 46 miners were killed and about 20 people were injured. The cause of the emergency was a methane gas explosion.
October 29 has been declared a day of national mourning in the country for the victims of the accident. The tragedy was called one of the largest disasters in the history of modern Kazakhstan. This was not the first tragedy in the history of ArcelorMittal Temirtau. In this regard, the government of Kazakhstan decided to stop relations with Indian billionaire Lakshmi Mittal.
Deal of the year
69% of respondents named the purchase of former ArcelorMittal Temirtau plant by the Kazakh unknown company QSG as the deal of the year. This was quite expected since the disaster at the AMT plant caused a storm of criticism among Kazakhstani citizens and for a long time this tragedy and its consequences were the #1 topic in Kazakhstan. Lakshmi Mittal left AMT and Andrey Lavrentyev, a Kazakh entrepreneur and chairman of the Allur Group was declared the owner of the company.
Demarche of the year
77% of respondents said that the demarche in 2023 was the arrival of Zhanaozen oil workers in Astana. It all started with the fact that on April 10 about 60-70 people gathered near the building of the Ministry of Energy in Astana who came from Zhanaozen with demands to employ them to Ozenmunaigas. They were the former employees of the BerAli Mangistau Company which had previously lost the tender for oilfield services for Ozenmunaigas.
The next day, April 11, specialists from a specially created contact group led by the head of the staff of KMG Yerkhan Umarov negotiated with the residents of Zhanaozen. The workers were offered employment in Ai-Bis LLP and Kezbi LLP (also providing oilfield services) with the same wages, but ex-workers of the BerAli Mangistau Company stated that they do not intend to take up the proposed jobs and demanded to be employed at Ozenmunaigas. As a result, the parties came to a compromise and the labor conflict was resolved where Zhanaozen residents left Astana.
Confrontation of the Year
41% of respondents considered that the arbitrations between the government of Kazakhstan and the shareholders of the Kashagan field are the confrontation of the year. The reason was the claims of the government of Kazakhstan against the international oil consortium regarding violation of the country’s environmental standards. On March 6, the Department of Ecology for the Atyrau Region conducted an inspection of the activities of the NCOC company where 10 violations of environmental legislation were identified. Already in April, the government filed claims against NCOC in international arbitration for violation of the terms of the tender. The government ordered NCOC to pay a fine of 2.3 trillion tenge (about $5 billion) for storing too much sulfur at the field. The operator denies guilts and challenged the court’s decision. In general, the parties plan to resolve the situation with a fine of $5 billion peacefully.
Disappointment of the year
42% of our readers identified the status of the gas processing plant construction project in the Atyrau region (led by QazaqGaz) as the main disappointment of the year. The national gas operator conducted a technical audit of the future plant and made certain changes. For example, its processing capacity has been reduced from 1.15 billion cubic meters up to 1 billion cubic meters. Accordingly, the output of commercial gas will decrease from 815 million cubic meters to 725.5 million cubic meters, liquefied gas (propane-butane) – from 119 thousand tons to 118.5 thousand tons, gas condensate – from 35 thousand tons to 17 thousand tons.
Moreover, the commissioning date of the plant has been postponed by a year – from 2024 to 2025. In 2021, when the project began, construction of the plant was planned to be completed in 2023. Therefore, a considerable part of Kazakhstanis, and in particular, residents of the Atyrau region are upset that the project is being delayed and its production capacity is decreasing.
Person of the Year
24% of respondents named the chairman of KMG Magzum Mirzagaliyev as the top-manager of the year in the oil and gas sector. During his management, the national company managed such significant events as the purchase of a 60% share in the Dunga project from the French oil and gas giant TotalEnergies, the commissioning of the Rozhkovskoye and Akzhai Yuzhny gas condensate fields and the modernization of the Astrakhan-Mangyshlak main water pipeline.
An important role of Magzum Mirzagaliyev is the development of the Trans-Caspian international transport route, namely, increasing the transportation of oil across the Caspian Sea and concluding an agreement with the Abu Dhabi Ports Company.
Another major achievement is Sinopec’s entry into the polypropylene project. It is known that the Chinese company can build a polyethylene production plant with a capacity of 1.25 million tons per year in the Atyrau region.