Renaissance of Kazakhstan gas industry

The completed gasification projects have allowed millions of Kazakhstan people to improve the quality of life, brought warmth and comfort to their homes

PHOTO: press-service archive

Bukhara-Gazli-Tashkent-Bishkek-Almaty Main Gas Pipeline

For independent Kazakhstan, which began its journey as a completely new state 30 years ago, almost all spheres of the economy had to be radically changed. This fate has not passed over the gas industry. Yes, the country inherited gas pipelines and technical equipment from the former planned union economy, but even in the nineties it was already the gas infrastructure that had practically worked out its time limit. And besides of that, the ties with other republics that had been developed over decades collapsed, relations became purely market-based, and the newly formed country had no funds for this at all.

“Key to start”

Nowadays, like a nightmare, the nineties are remembered with empty stores, closing enterprises and mass unemployment, hopelessly delayed wages and the endless depreciation of the ruble.

Beineu Compressor station, Mangistau oblast

The budget of the newly formed republic is also empty, which means that there were constant interruptions with the most necessary services for people, such as electricity, gas, water and heat supply. The neighboring newly formed states are also not in a better position. The same Uzbekistan and Turkmenistan, which supplied gas to Kazakhstan, now require stable currency for their services, and since there is none, the tap is simply shut off, the supply of natural gas is stopped. In the yards of apartment buildings, people light fires to cook food for their families, and in winter, people simply freeze in their apartments.

All this happened, as well as the way out of the existing situation, and not always successful. For example, for the gas industry, another critical period was transfer of its management in 1997 to Tractebel, the Belgian company.   But during the years of this concession, the company simply transported and sold gas, not fulfilling its obligations to the government and the people, which aggravated the situation, bringing it to a catastrophic one.

The first president of Kazakhstan, Nursultan Nazarbayev, directly interposed in the matter. In 2000, KazTransGas JSC company was established by the government decree, to which the entire gas transportation infrastructure was transferred. Three years later, it became the national operator in the field of gas and gas supply of the republic, so the development of the domestic gas industry was given the “Key to Start”.

This is how veteran, Mukhatai Shanbatyrov, recalls the beginning of the formation of the gas industry of an independent state. He started as a trainee, worked for more than 47 years and retired as the First Deputy General Director of Intergas Central Asia JSC.

Mukhatai Shanbatyrov – gas industry veteran

– After the collapse of the Soviet Union, the country’s economy, all sectors of the national economy, including gas, remained in a sad condition. Due to breaking of the usual economic ties, there was a massive, systemic decline in production, the level of gasification was very low. The population and disparate gas facilities in the regions were unable to pay for the consumed gas. Transit ceased to generate income.  As a result, the lack of any funds, plus the persistent inflation. These were the first years of independence, but our country survived this period.

In the late 1990s, the period of development and growth of the gas industry began. And on the 30th anniversary of Kazakhstan’s independence, we have something to be proud of. Our country has laid powerful and reliable transit routes, we can diversify gas flows in any direction.

We fully meet the country’s domestic gas needs. Kazakhstan people no longer even think that in winter they can be left without gas, without heat. Over the years, KazTransGas, our gas industry, has developed the trust of people, convinced of its reliability. But to develop such trust is a very difficult and time consuming process.  And it’s true, almost never our gas workers disrupt the supply, transportation and transit! This speaks of the high qualification and professionalism of Kazakh gas workers, – said Mukhatai Shanbatyrov.

A single entity

The priority task for the newly formed company was to provide the southern regions with an uninterrupted supply of gas, and this required its own resource base. In 2001, the first drilling took place at Amangeldy gas condensate field in Zhambyl oblast. Two years later, the field was already put into operation and the natural gas produced there contributed to a significant reduction in the gas deficit in the south. It was a significant event, the Elbasy, Nursultan Nazarbayev, took part in the ceremony of production of the first gas at Amangeldy.

On October 23, 2003, pilot production of Amangeldy field began

In the same 2003, KazTransGas signed a long-term contract with the Russian Gazprom for the transit of a large volume of Turkmen and Uzbek gas through the territory of Kazakhstan. The funds received made it possible to start capital investments in the gasification of cities and towns of the country.

A breakthrough for the domestic gas industry was the project for the construction of “Kazakhstan-China” main gas pipeline. Its implementation made it possible to bring the republic’s transit potential to a new level.

President of Kazakhstan, Nursultan Nazarbayev and President of PRC, Hu Jintao, put into operation the first line of Kazakhstan-China MGP, Astana, 2009.

“Kazakhstan-China” main gas pipeline is an integral part of the interconnector “Turkmenistan-Uzbekistan-Kazakhstan-China”, with a total length of more than 7,5 thousand km, 1,3 thousand km of which fall on the territory of Kazakhstan. In 2017, the Kazakhstan gas export to PRC began.

Start-up of CS 4 and 8 Kazakhstan-China MGP, September 2016

Kazakhstan-China MGP scheme

Ceremony of the Kazakhstan gas export commencement to PRC.  Akbulak GMS, 2017

Another project, implemented by KazTransGas, which is also a national treasure, was the Beineu-Bozoy-Shymkent main gas pipeline with a length of 1,454 km and a throughput capacity of 15 billion m3 per year. The project is of major strategic importance for Kazakhstan, since due to it, it was possible to achieve an uninterrupted supply of natural gas to the southern regions of the republic.

That is very important for the entire domestic gas industry, the construction of these two pipelines allows diversifying the export supplies of Kazakhstan gas, creates a single gas transportation system, i.e., ensures the energy security of the country. This suggests that KazTransGas has not only managed to implement large-scale international projects, but also to unite the entire existing gas infrastructure in the country, companies operating separately in the gas sector, into a single entity.

To summarize the work of KazTransGas, over 21 years the company has built and put into operation more than 10 thousand km of main gas pipelines. Today, it manages more than 20,000 km of main gas pipelines and more than 56,000 km of gas distribution networks.

Today, KazTransGas is considered to be the most important gas partner for neighboring states, and in a short time has become one of the key operators of the transit flow in the Eurasian region. This means that in the development of the gas transportation sector, Kazakhstan has taken advantage of the window of existing opportunities.

Not only gasification, but also modernization

During the company work, an unprecedented gasification of the country was carried out. Today gas is available in 12 out of 14 regions of Kazakhstan.  The national operator provides more than half of the country’s population with affordable, comfortable and environmentally friendly fuel, the share of gasification has almost reached 55%, 10,2 million people use gas. Only over the past 7 years, more than 3 million Kazakhstan people have received such an opportunity, the level of gasification of the population has increased from 30% in 2013 to 54% in 2020. The number of gasified domestic enterprises doubled: from 23,725 to 54,368 business entities.

For comparison, if in 1991 the domestic consumption of gas in Kazakhstan was about 7,5 billion m3 per year, then in 2020 the consumption of the domestic market of the country amounted to 17 billion m3, i.e., it increased two and a half times.

The regional gasification schemes were developed, and an updated resource base for commercial gas was drawn up for this. The relevant memorandums of cooperation in this area have been concluded with the akimats of the regions.

The list of cities and villages, gasified by KazTransGas, is impressive. We list only large cities – Kyzylorda, Taldykorgan, Shu, Zaisan, Turkestan, Aral, Kazaly, Baikonyr, Kapchagay, Yesik and Zharkent.

Shu city’s gasification, 2012

Flaring in Zaisan city, 2013

Gas came to Turkestan, 2013

During the years of independence, it was possible to solve a global, historical issue for Kazakhstan – this is the gasification of the capital city, Nur-Sultan, the central and northern regions. Gas has been already supplied to Nur-Sultan, the first subscribers have been connected in Temirtau, Karaganda and Zhezkazgan.

The first gas start-up from AGDS-1, July 4, 2020

The completed gasification projects have allowed millions of Kazakhstan people to improve the quality of life, brought warmth and comfort to their homes.

Gasification has saved the oblast center of Turkestan from smog, where air pollution has been reduced by 65%.

A lot of work has been done and KazTransGas’ own funds have been invested in the implementation of the project to modernize gas distribution networks in Shymkent and Taraz. Many people doubted the possibility of implementing these projects, and now these large cities have the most advanced gas supply system.

And works on gasification of the country are permanently going on. At that, they are financed not only at the expense of the budget funds, but also at the expense of KazTransGas. In recent years, the method of public-private partnership has been actively used.

Even by world standards, such a large-scale gasification and modernization has never been carried out anywhere.

A new era for the gas industry

In this anniversary year of independence of the Republic of Kazakhstan, KazTransGas was given the status of a national company by a government decree.

This was done on behalf of the President of Kazakhstan, Kassym-Zhomart Tokayev, who instructed the Cabinet of Ministers to transform the gas operator into a full-fledged vertically integrated company.

Oleg Chervinskiy

According to Oleg Chervinskiy, oil and gas expert, chief editor of Petroleum magazine, for a very long time the gas industry in Kazakhstan was undeservedly on the sidelines.

• – With high oil prices, investors willingly invested in oil, using gas as a tool to increase production of liquid hydrocarbons. The global energy transition in recent years has dramatically raised the value of natural gas as an environmentally friendly fuel and as a raw material for gas chemistry. In this situation, separating KazTransGas into an independent gas company and delegation of an additional functions – is a timely decision more than ever. There is a hope that with the reform of pricing in the gas industry, exploration and development of gas fields, which are many in Kazakhstan, will become profitable. I very much look forward to new discoveries in promising sedimentary basins, in the same Aral Sea, – the expert pointed out.

It should be added that large-scale transformations in the country’s gas industry have been carried out since 2014 under the direct supervision of Kairat Sharipbayev. He formed a strong and successful team that was able to bring KazTransGas to a new level. Kairat Sharipbayev himself served in these years as the Chairman of the Management Board, Chairman of the Board of Directors of the company. In November 2020, on the eve of the global reform of KTG, he was again appointed as the Chairman of the Board of KazTransGas JSC by the country’s leadership.

Over the 30 years of independence, the gas industry has made a long way – having built new gas pipelines, today Kazakhstan uses its transit position in global gas export flows to its advantage. The indicators of the country’s gasification have radically changed, the historical task of gasification of the capital has been solved. Nowadays the national company, in my opinion, is on the verge of a new big breakthrough, and we will all become its witnesses.

With the assignment of the status of a national company, KazTransGas was granted the pre-emptive right for exploration and production at gas and gas condensate fields.

RK Main gas pipelines map

All this suggests that the extraction, processing, and transportation of natural gas is now becoming a priority in the energy balance of the state. This poses a number of important tasks for KazTransGas.

Firstly, the accelerated growth of the gas resource base, secondly, the stimulation of commercial gas production, and thirdly, geological exploration and gas production, both at existing and new fields. Also, the main task is to modernize the gas transportation and gas distribution infrastructure of the country.

The most important thing is that all these tasks are quite within the capabilities of KazTransGas, and this is what the company has been proving for all the years of its work. By acquiring a new status and expanding its capabilities, the company will be able to continue gasification of the country, using the transit and export potential to make a significant contribution to the economic and social development of Kazakhstan.

Original: https://forbes.kz/process/renessans_kazahstanskoy_gazovoy_otrasli/