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The Locomotive of the Country’s Economy
KazMunaiGas National Company is rightly considered to be one of the country’s economy locomotives. Today it provides about a third of overall oil production, nearly 96% of gas transportation, 67% of the pipeline transportation and 83% of oil refining in the country. According to Energy Intelligence Group marketing company, KazMunaiGas is currently included into the list of the world’s 50 leading oil and gas companies, and as of year-end 2013 KMG rose from 34th to 33rd position. The strategic goal of the national holding company is entering the top 30 list of the best global corporations in the oil and gas industry.
Stable growth of production
In 2013, the consolidated volume of oil and gas condensate produced by NC KazMunaiGas JSC group of companies amounted 22.63 million tons, a 5.8% increase in comparison with 2012. Considering that 81.8 million tons of oil was produced in Kazakhstan last year, the share of KazMunaiGas in the nationwide oil production reached 27.7%.
Previous year’s production growth in KMG mainly occurred due to a record operating performance of JV Tengizchevroil LLP (TCO), which is producing on the Tengizskoe oil and gas field, where the National Company owns 20% of shares, as well as due to increase in production on the Karachaganak Petroleum Operating B.V. and JSC Mangistaumunaigas (MMG) and Kazakhturkmunai (Mangistau region), the subsidiaries of JSC KazMunaiGas Exploration Production (KMG EP).
The consolidated production of natural and associated gas in NC KazMunaiGas JSC amounted last year to 6.924 billion cubic meters, which exceeds 2012 years index by 25.3%.
In the first six months of 2014, the consolidated volume of oil and gas condensate in the KMG group of companies has reached 11.1 million tons, which exceeds the production plan for the period from January to June 2014 by 1%, thanks to the successful production on KMG EP and MMG. KazMunaiGas is aimed at steady and stable growth in the future. These plans are taken into account in the National Company Development Strategy through to 2022, approved by the Board of Directors on December 10, 2012. It anticipates intensification of the work in the area of geological exploration on land and at sea with aim of increasing reserves; increasing of oil and gas production, creation of a flexible hydrocarbons transportation system, increasing of production capacities of the refineries and improving the quality of oil products, as well as the establishment of an effective and transparent asset management system.
Its ultimate goal is to ensure maximum benefits for Kazakhstan. For example, it is expected that oil and gas production will increase up to 35.4 million tons and 1.5 billion cubic meters per year by 2022. In addition, KazMunaiGas has developed and approved a special Plan of stabilization measures for 2013-2015, in case if oil price on world markets will decline below $ 80 per barrel. Therefore, the Company is ready for the actions which will allow to mitigate the impact of such possible course of events to the greatest possible extent.
In future, the basic growth prospects of oil production in Kazakhstan are connected with the three giant oil fields: Tengiz, Karachaganak and Kashagan, where KazMunaiGas has share participation. This way, a total annual oil production on Tengiz should increase to 38.6 million tons by 2022, mainly due to the implementation of the Future Expansion Project (FEP), whilst KazMunaiGas share in this project will amount to 7.7 million tons of oil. The project will be implemented by the technological scheme, approved by KazMunaiGas, allowing to achieve the maximum coefficient of oil production and economic efficiency for the country, during the whole period of field's development.
Production indexes
Another large oil field - Karachaganak, developed by Karachaganak Petroleum Operating B.V. consortium, in which KazMunaiGas has 10% share, is now on Stage 2 of commercial development (Stage 2M). In 2013, it produced 17.5 billion cubic meters of gas (8.6 billion cubic meters of which were injected), which exceeds plan by 6.2%, and 10.5 million tons of liquid hydrocarbons, which is a 3.2% excess.
The planned LH (liquid hydrocarbons) (stabilized) production volume for 2014 is 10.9 million tons, and gas production is 17.4 billion cubic meters. After the completion of Stage 2M projects, it is planned to implement the Karachaganak expansion project (KEP) to further support the oil rate-plateau of LH production, which includes drilling of additional production and injection wells, a hookup of these wells on preparation facilities, installation of additional compressors for increasing the gas injection, the construction of additional facilities for re-injection gas preparation and technological facilities fuelling.
The full-scale development is suggested to be fulfilled in several stages to ensure effective implementation of the project. As for the Kashagan field on the Caspian Sea shelf, KazMunaiGas is hopeful that after the necessary repair-and-renewal operations and production recovery measures, this deposit will be able to annually provide a substantial amount for a nation-wide oil and gas "piggy bank".
Increasing the resource potential
One of the priorities of KazMunaiGas is the growth of reserves through geological prospecting and exploration (GPE). Besides, the Company associates the further accumulation of crude hydrocarbons not only with the resource potential of the Kazakhstan sector of the Caspian Sea, but with deposits located on land. Even today, KMG jointly with subsidiaries MNC KazMunaiTeniz JSC, N-Operating Company LLP, Atyraumunaigas JSC and Zhambyl Petroleum LLP, is carrying out a range of exploration and research activities on the entire group of blocks in the Caspian Sea.
Particularly, a large amount of geological and geophysical studies on the "N" section have been conducted in recent years, including 2D and 3D seismic surveys on the Rakushechnoe-sea structure, drilling of exploratory wells R-1 and N-1 on the structures Rakushechnoe-sea structure and Nursultan, the basin modeling, risk assessment, as well as the ranking structures. Currently, the preparations for drilling the AR-1 evaluation well, which will begin in December 2014 at Rakushechnoe-sea structure, are in progress. The spudding of first exploration well on Satpayev STP-1 structure is also scheduled on 2015. The technical project on its construction is already completed.
In 2013, oil deposits were discovered as the result of drilling the first exploration well on Zhambyl, the exploration period of which may be extended for 2 years, up to 2016. Also, on offshore exploration areas Makhambet and Bobek, the results of the recent seismic research identified new prospective structures and deposits. In the scope of another maritime project - the Pearls - the State Committee of the Republic of Kazakhstan on reserves accepted transfer of ownership of recoverable oil reserves on Khazar field in the contract area.
Obligations on the working program of the Pearls PSA on exploration wells drilling in the Khazars, Auezov, Tulpar and Naryn structures are fulfilled. In addition, the work on obtaining the rights for subsurface management of the Isatay, Abai and Ustyurt projects is in progress. In the future, KazMunaiGas intends to increase cooperation with the Russian Federation in the field of joint work on the Khvalynskoye, Centralnaya, Kurmangazy, Zhenis and I-P-2 projects.
Currently, in addition to the active work on the Caspian Sea shelf, the National Company is focused on implementing an effective exploration on land. In this regard, all works on the implementation of a comprehensive study of 15 sedimentary basins of Kazakhstan have ended in 2013. A geological report on the results of high-precision aero-magnetic survey of pre-Caspian basin conducted earlier, is prepared and defended.
Talking about the priority projects on land, on which KazMunaiGas lays hopes, among them are: oil condensate field Urihtau, sections Temir Severniy and Koskulskyi (Aktobe region), Pribrezhnoe and Korolevskoe post salt (Atyrau region) oil fields, Kansu, Samtyr, Bekturly Vostochniy, Kosbulak (Mangistau region) sections, section Orken (Kyzylorda region), section Zhilanshyk (Kostanay region), as well as cross-border gas-condensate field Imashevskoe, located on the territories of Kazakhstan’s Atyrau region and Russia’s Astrakhan region.
KazMunaiGas associates further hydrocarbon reserves accumulation also with the supplementary exploration of KMG EP’s license blocks, including Uzen-Karamandybas, Liman, Taisoygan, Karaton-Sarkamys, S.Nurzhanov, Makat Vostochniy, Zapadnaya Prorva, Novobogat Zapadniy, Zharkamys Vostochniy-1, Temir, Teresken, Rozhkovskaya (Fedorovsky block), Karpovskiy Severny block.