The gas perspectives
Without market liberalization, they are pessimistic in Kazakhstan
A sevenfold growth
Over the three decades of independence, Kazakhstan has increased its natural gas production by seven times. However, in 15-20 years, the country may face a gas shortage if the industry does not carry out drastic reforms.
In 2019, the country produced 56.4 bln cubic meters of gas, according to the Ministry of Energy. At the same time, 40% of the raw gas is not processed but is re-injected into the reservoir to maintain a high oil production level. Of the 33 bln cubic meters of commercial gas produced, 3 bln cubic meters are used for the own technical needs. Thus, 30 bln cubic meters remained for free sale in 2019, of which 16.3 bln were consumed domestically, and 13.7 bln were exported.
The Kazakhstan market's specifics are that more than half of the gas produced in the country is associated gas (that is, extracted together with oil during the production of liquid hydrocarbons). The increase in its production in recent years is directly related to the rise in the volume of produced oil (see Diagram 1). As a result, after the launch of the Kashagan offshore field's full-scale development, in 2017, gas production in the country immediately increased by 13.4% compared to the previous year. In 2018, the growth continued: another 4.8% increase.
At the same time, the volume of so-called commercial gas (gross production minus re-injection.) is increasing. In 2020, after growing over the past few years, the Ministry expects a decline (see Diagram 2). Although it is short-lived and caused by the industry's difficult situation as a whole, a further increase in the production of commercial gas will be constrained by several factors.