Projects
Year-End Summary of Kazakhstan❜s Gas Sector
The national company QazaqGaz, with the support of the government, the Ministry of Energy of Kazakhstan, and the Samruk-Kazyna Fund, has carried out extensive reforms in the country's gas industry over the past two years. These reforms have already produced tangible results: for the first time in the company's history, dividends were paid out to the Samruk-Kazyna Fund in the amount of 27 bln tenge.
Since the beginning of 2022, QazaqGaz has invested more than 400 bln tenge of its funds into the economy of Kazakhstan as part of its investment projects. Specifically, the gas transportation system has been modernized, and systemic infrastructure projects have been implemented, enhancing Kazakhstan's energy security and laying the groundwork for the subsequent development of the gas sector, poised to become a new driver of Kazakhstan's economy.
Investment Projects that Marked 2023
• The Sarsha locality and the "Warm Beach" resort area have been gasified. This will boost the development of the tourism industry on the Caspian coast in the Mangystau region and improve the economy of enterprises located in the region. Plans include converting a new desalination plant to gas, peasant farms, greenhouses for growing vegetables and fruits, five active recreation bases, and hotels and entertainment centers that will be built in the future.
• The construction of the looping of the "Makat-Northern Caucasus" main gas pipeline has been completed.
This will increase the reliability of gas supply to the population and major industrial enterprises in Atyrau and the Atyrau region.
• The second line of the "Beyneu-Zhanaozen" main gas pipeline in the Mangystau region has been launched. The implementation of the project will increase the capacity and throughput of the gas transport system, covering the growing volumes of natural gas consumption in the Mangystau region.
• The first stage of gas infrastructure construction for the Almaty Energy Complex has been completed.
The modernization of Almaty's thermal power plants with their gas conversion will improve the quality of life in the metropolis by reducing air pollution and covering the growing energy consumption of the southern region.
Gasification of Regions
According to official data from the Ministry of Energy of Kazakhstan, the level of gasification in the country is steadily increasing. In 2022-2023, 412 settlements with a population of 628 thousand people were connected to the gas supply system. Despite unprecedented challenges in the energy sector and significant wear and tear on the gas transport system, uninterrupted year-round gas supply to the republic's residents has been ensured. To achieve this, during the period of 2022-2023, more than 2,600 critical defects in the main gas pipeline systems were rectified, and the reliability of the gas transport system was strengthened.
Gas Resource Base
The expansion of the resource base continues through new exploration projects. As part of the gas industry pricing reform, a stimulating formula for the purchase price of new gas volumes from subsoil users has been approved, which will lead to an increase in the production of commercial gas.
To develop its gas resource base, QazaqGaz is actively working to obtain subsoil use rights for geological exploration in new areas. The national company plans to conduct work in the Mangyshlak, Caspian, and Ustyurt-Buzachi basins. Prospective areas have been identified, and extensive seismic exploration will begin shortly.
The gas resource base is also being developed through joint field development with foreign partners. In 2023, the Chinese company Geo-Jade Petroleum Corporation signed an agreement for joint field development of the Pridorozhnoe and Pridorozhnoe-South fields.
An important event was the commissioning of the new Anabay gas field in the Moynkum district of the Zhambyl region in the fourth quarter of 2023. Exploration and Production QazaqGaz LLP has fully equipped the field, reactivated three drilled wells, and constructed the Anabay - Zharkum gas pipeline. Initial production at the field will be 6.7 mln m3 with an increase to 40 mln m3 per year.
Tariffs and Pricing
Reforming pricing in the gas sector is necessary for its effective functioning and development. However, reforms must proceed smoothly without creating social tension in society. A socially just pricing reform entails shifting the main burden of fair gas prices to industrial consumers.
As for the population, in the past year alone, QazaqGaz has subsidized gas prices for this category of consumers to 389 bln tenge using its funds.
International Cooperation
Kazakhstan has all the prerequisites to become a regional leader in the gas sector. These include resources, reserves, geographical location, ongoing pricing reform, and years of experience in complex hydrocarbon projects.
In the fall of 2023, the transit of Russian gas to Uzbekistan through Kazakhstan's territory in reverse mode was initiated for the first time. This became possible thanks to the completion of the project to prepare a combined dedicated route of the "Central Asia - Center" main gas pipeline, spanning 823 km, in a record 3.5 months.
Furthermore, a new export contract for 2023-2026 with PetroChina International was signed, ensuring a steady inflow of foreign currency revenue to the national company. The incoming funds will be invested in new projects and the company's development.
One of the world leaders in artificial intelligence, cloud technology, and data storage, Presight (G42), with its headquarters in Dubai, will collaborate with the national company in the digital transformation of Kazakhstan's gas sector.
As part of the signed agreement, a pilot project to increase the transparency of gas accounting is planned. At the same time, the parties are considering the joint development of a universal billing system for effective interaction between the subscriber and the gas company.
Development Strategy
To achieve the set goals, a comprehensive strategy of QazaqGaz has been developed, including 12 development directions and more than 50 projects. Special attention is paid to training young specialists for the domestic gas industry. In 2023, for the first time, a scholarship was established for the best gas industry students, the highest scholarship for undergraduate students.
Plans for 2024-2025 include new projects in upstream, downstream, and midstream blocks, with capital investments exceeding 3 trillion tenge. These include the expansion of the gas resource base, geological exploration funded by investors through carry financing, increasing the capacity of the second line of the Beyneu-Bozoy-Shymkent main gas pipeline, and the construction of LNG and CNG plants on the routes of the Republic of Kazakhstan.
For the first time, the international rating agency Morningstar Sustainalytics has assessed the sustainability of the QazaqGaz group of companies globally. Receiving an ESG rating of 19.2, QazaqGaz confirms its leading position in the gas industry nationally and globally. This rating has been a key step in the company's development strategy to enter global capital markets and develop prospects for an Initial Public Offering (IPO).
Ecology of Astana and Almaty Cities
Following the head of state's directive on converting Almaty's thermal power plants to gas, a subsidiary of QazaqGaz, Intergas Central Asia JSC, has commenced the second stage of gas infrastructure preparation. This new stage marks the beginning of the construction of the second line of the "Almaty-Baiserke-Talgar" gas pipeline.
The second line of the "Almaty-Baiserke-Talgar" main gas pipeline, spanning 62.4 km, will ensure uninterrupted natural gas supply to consumers, TPP-2 and TPP-3, and will prevent emergencies related to the shutdown of the existing single-thread gas pipeline. Additionally, the gas pipeline is expected to enable full-scale gas provision for the city of Almaty through the Talgar AGDS and to carry out major repairs on the first line of the "Almaty-Baiserke-Talgar" main gas pipeline without stopping gas supply to connected AGDSs.
In 2023, the first stage of construction of the gas infrastructure for the Almaty energy complex was completed. The first stage included the launch of the GRS and the opening of the TIP-04 bypass between the "Almaty-Baiserke-Talgar" and "Kazakhstan-China" main gas pipelines.
Additionally, the gasification of the capital continues. In Astana, TPP-1, TPP-2, and TPS-3 have been connected to natural gas. This has eliminated the population's heat supply deficit and improved the capital's ecology.