The head of QazaqGaz about the vision of "Zhanargan QazaqGaz"

Nur-Sultan – Chairman of the Management Board of JSC “NC “QazaqGaz” Sanzhar Zharkeshov spoke at the government hour in the Senate of the Parliament of the Republic of Kazakhstan and spoke about the vision of “Zhanargan QazaqGaz”, anti-crisis measures, plans for gas supply of the country with natural gas. According to Sanzhar Zharkeshov, work has begun to develop a QazaqGaz Development Strategy, which identifies key priorities. In general, the company is focused on increasing the resource base of commercial gas, developing new energy, gas chemistry and ensuring energy security, energy efficient consumption, improving tariff and pricing policy. In addition, the company plans to increase investment and operational efficiency, introduce transparency of corporate governance and ESG principles, and carry out digital transformation. In order to ensure uninterrupted and trouble-free gas supply to the country, the company will take measures to ensure the country’s energy security by properly operating the country’s gas transportation system, protecting the domestic gas supply market in the conditions of the formation of the common gas market of the EAEU in 2025. In addition, new gas corridors have been introduced in recent years, an integrated gas transportation system has been formed from previously disparate main gas pipelines. In the future, if the resource base is expanded, this will allow creating a Central Asian gas hub with a huge transit and transport potential. “However, in 2024, the gas industry may face crisis phenomena. If all consumer requests are satisfied, the crisis will begin in 2023. Firstly, a gas shortage is projected from 2024. The needs of the domestic market will exceed the available gas resources by ~ 1 billion m3. Exports will cease. This is due to the large volume of applications from new large consumers, including projects for converting EPP plants to gas (electric power plant -2 and electric power plant -3 in Almaty, etc.), connecting new gas chemical complexes (OHK, WestGasOil, etc.) and new large commercial consumers (such as ArcelorMittal, Condensate, etc.) to gas supply. Secondly, the financial stability of the National Operator is expected to deteriorate in 2022 due to the unprofitability of the domestic market. In this regard, urgent measures need to be taken,” the Chairman of the Management Board noted. In addition, according to Sanzhar Zharkeshov, the issue of increasing the resources of commercial gas at the Kashagan and Tengiz gas processing plants is on the agenda. The development of comprehensive stimulating approaches to reducing back-injection and flaring of associated gas is a necessary condition for increasing the resource base. Also, in order to ensure safe operation, local executive bodies need to speed up work on eliminating comments on gas supply facilities (736 objects or about 60% of the objects transferred to the local executive bodies). As the Chairman of the Management Board noted, it is necessary to comprehensively consider the issue of transferring the functions of local executive bodies for the construction of gas supply systems to QazaqGaz. It must be recognized that gas supplies to the domestic market are unprofitable for QazaqGaz. “The entire value chain of commercial gas (purchase price from a subsurface user, transportation services, wholesale and retail prices) is set by the Ministry of Economy and Finance of the Ministry of National Economy of the Republic of Kazakhstan in accordance with the current legislation of the Republic of Kazakhstan. In 2021, losses amounted to 162 billion tenge, while in the autumn-winter heating period of 2022-23, they may exceed 184 billion tenge. Losses are due to the fact that the cost of purchasing gas from subsurface users in 25,209 tenge per 1000 m3 exceeds the wholesale price of gas sales to gas distribution companies, which is 14,327 tenge,”-the head of QazaqGaz noted. It is worth noting that a forecast of the sufficiency of financial resources from the National Operator to compensate for the losses of the domestic market until 2025 has been developed. As the Chairman of the Management Board emphasized, the General Scheme of gasification, gasification projects of the northern regions, the capital and other settlements along the Saryarka gas pipeline are being updated. A rational approach will be applied to increase the efficiency of investments in gasification of the northern regions and Kazakhstan as a whole. Summing up his speech, the head of QazaqGaz noted that the company supports the idea of demonopolization and liberalization of the gas supply market as the ultimate goal in the development of healthy competition.

“However, in order to ensure the energy security of the Republic of Kazakhstan, taking into account the formation of the single gas market of the EAEU in 2025, the need to solve a set of systemic issues in expanding the resource base and improving the pricing system, the implementation of a set of incentive measures for all participants in the gas supply market of the Republic of Kazakhstan, the role of the National Operator QazaqGaz as an authorized organization of the Republic of Kazakhstan is increasing. In this connection, I consider it expedient to preserve the model of a single buyer of QazaqGaz, the priority right to subsurface use, the preferential right to purchase commercial and crude gas,” concluded Sanzhar Zharkeshov.