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Prospects and Barriers to the Development of Kazakhstan❜s LPG Market

The LPG market in Kazakhstan presents an interesting alternative to the Russian market despite the latter's significant advantage in balance factors. In contrast to a liberalized market model, the market in Kazakhstan is subject to strict regulation. We present a detailed analysis of the LPG market in the Republic of Kazakhstan.

OMT-Consult is a leading company in the oil and gas sector, conducting analytical and marketing research and business consulting. We conduct market research, develop business plans and business models, and provide consulting on the creation of marketing and sales strategies.

Production and Import

Traditionally, the CIS countries can be divided into two major categories: net exporters and net importers. The first category includes only a few countries: Russia, Kazakhstan, Azerbaijan, and Turkmenistan. The second category encompasses all others. It is important to note that net exporters directly impact net importers. Net exporters in the CIS region hold a dominant share in the LPG markets of importing countries, which is not surprising given that, for example, the LPG market in Russia is in surplus, and this surplus is expected to grow over the next two years.

Fig. 1. Dynamics of LPG production in Russia and Kazakhstan, 2019-2024.

*Incomplete data for 2024 (first 6 months)According to OMT-Consult, LPG production in Russia has been increasing over the past two years, while in Kazakhstan, there was a noticeable decline in 2022. However, production began to rise again in 2023 (see Fig. 1). In 2024, based on the results of the first six months compared to the same period in 2023, production in Russia showed a slight increase (+0.6%), while Kazakhstan saw a more significant rise (+4.6%). Kazakhstan’s LPG production is expected to expand in the coming years, with plans to increase output by 351,000 tons per year in 2025-2026, driven by the commissioning of a gas processing plant at the Kashagan field and another in the Mangystau region.

Experts anticipate long-term growth in the market, primarily due to the commissioning of new gas processing plants and the modernization of existing ones. Additionally, increased oil refining at refineries will play a crucial role. For example, in 2028, LPG production is expected to grow by 1.1 mln tons with the launch of the second gas processing plant at Kashagan and the first at Karachaganak. Furthermore, production may also increase due to the development of new fields.

Fig. 2. Market share of key LPG producers, January-June 2023-2024.

LPG production in Kazakhstan primarily occurs at gas processing plants (73%), with only 27% produced at oil refineries. Over 40% of the LPG produced in Kazakhstan comes from the Tengizchevroil gas processing plant. Following are the Zhanazhol GPP and Pavlodar OCR (see Fig. 2). Other plants, each holding less than a 10% market share, include producers such as KazGPZ, Kazgermunai, Zhaikmunai, Gas Processing Company, Kazakhoil-Aktobe, Atyrau Refinery, and South-Oil. The majority of production growth this year is attributed to the increase in output at Tengizchevroil (+8.1%). Growth was also observed at the Atyrau Refinery (+10.8%), Pavlodar Oil Chemistry Refinery (+1.9%), and Zhaikmunai (+58.5%). Other producers have reduced their LPG output.

LPG imports from Russia to Kazakhstan remain low: less than 1,700 tons in 2023 and 1,900 tons in the current partial year. In 2024, several companies exported LPG to Kazakhstan, including Orsknefteorgsintez (50.8%), Kirishinefteorgsintez (6%), and ECO Group LLC from Kombinatskaya station (43.2%).