Outlook for Kazakhstan's gas industry

Sep 20, 2005 02:00 AM

Natural gas is transported in Kazakhstan through the trunk pipeline system that stretches about 10,000 km include branches and underwater pipelines.
The pipeline system was built under the Soviet Union and was geared toward natural gas supplies for northern Russia, Ukraine, and the Caucasus. The pipelines were designed to that the needs of industry and residents of Kazakhstan were met only in the cities and towns along the transit pipelines. As a result Kazakhstan imports much of the gas it consumes.
The western regions where the main pipelines are receive Kazakh, Russian, and Turkmen gas. Aktyubinsk and Kostanai regions in the north-west receive gas from the Bukhara-Urals pipeline and from Zhanazhol field. The most densely populated and industrialized southern region received gas from Uzbekistan, but shipments are irregular, costly, and do not cover demand.

Natural gas is transported in Kazakhstan using the trunk pipeline system that passes through eight regions of the country and stretches about 10,000 km including branches and underwater pipelines. The pipeline system was built as part of the Soviet gas transport sys-tem and was designed to supply natural gas from Central Asia to the northern regions of Russia, Ukraine, and the Caucasus. The pipelines were designed so that commercial and residential needs were met only in the Kazakh cities and towns along the transit pipelines.
The trunk pipelines in Kazakhstan are not technologically linked, which prevents their use to pump inexpensive gas produced in the western regions of the country to the southern and northern regions of the country. This is especially a problem for consumers in southern regions and the city of Almaty.

The dependence on Uzbek gas, which costs twice or three times as much as gas produced in the western regions of Kazakhstan, has significantly narrowed the gas market in the region. Consumers in Kostanai region are no less dependent on imports of Russian gas.
The annual capacity of the trunk gas pipelines is 190 bn cm at present. The current system was built for three main areas Central Asia Centre, Orenburg-Novopskovsk, and Bukhara-Urals, and includes the Bukhara-Tashkent-Bishkek-Almaty pipeline that supplies Kazakhstan's southern regions. The main problem with the gas pipelines is that they have reached the critical depreciation level and must be reconstructed.

The modernization of the Central Asia Centre gas pipeline is a priority for Kazakhstan. This pipeline is the base structure for long-term agreement with Russia's Gazprom for gas transport from Turkmenistan, Uzbekistan, and Kazakhstan to Russia and on to Europe. The modernization of the pipeline will increase capacity from 50 bn cm to 90 bn cm a year. Given the increase in the transport of Turkmen gas Gazprom is also considering building a new pipeline.
The Soyuz and Orenburg-Novopskov pipelines with two compressor stations that pass through West Kazakhstan region from the Orenburg Gas Processing Plant to the Alexandrov Gai compressor station in Russia can handle transit of up to 42 bn cm a year and in recent years have been transporting 26-29 bn cm.

A pipeline with capacity for 30 bn cm will run from the existing compressor station Deryalyk in north-western Turkmenistan through Kazakhstan to the Alexander Gai compressor station. The Bukhara-Urals pipeline intended to transport gas from Uzbekistan and Turkmenistan to Russia's industrial regions is used more to supply gas to Aktyubinsk region these days.
The Gazli-Shymkent-Bishkek-Almaty, Kartaly-Kostanai, and Uzen-Aktau gas pipelines are used to transport gas for the domestic market to the southern regions of Kazakhstan, Mangistau, and Kostanai regions. The Gazli-Bishkek pipeline also provides transit for 500 mm 1 bn cm for consumers in Kyrgyzstan.

New pipelines are also being built. The opening ceremony for the Akshabulak-Kyzylorda pipeline in Kyzylorda was held on November 11, 2004. The 122.9 km pipeline with capacity of 205 mm cm a year provides gas for consumers in Kyzylorda region.
New projects by TengizChevrOil to increase oil production from 13 mm to 20 mm 23 mm tons will increase production of associated gas by 2010 to 14 bn cm a year. TengizChevrOil is building a pipeline from refineries at Tengiz field to the Kulsary compressor station along the Central Asia-Centre pipeline.

Agip KCO, which is developing Kashagan field, also plans to build a gas pipeline with capacity for 9 bn cm to the Central Asia Centre pipeline system. Aktobemunaigaz, controlled by China's CNPC, will build a pipeline from Zhanazhol field to the compressor station along the Bukhara-Urals pipeline.
The Ishim (Rudny)-Petropavlovsk-Kokshetau-Astana pipeline will be built under the program to develop the gas industry in Kazakhstan for 2004-2010. The pipeline will be 1,216 km long with a diameter of 750-1,000 mm and will pass through the cities of Leninsk and Kyzylorda to the Gazli-Almaty pipeline. It will pump 5 bn cm of gas a year and will cost an estimated $ 850 mm. The viability of the project given its high cost will depend on further re-search based on growing gas production in Aktyubinsk region and confirmation of reserves in the northern Aral region, and the outlook for gas shipments to China with Turkmenistan and Uzbekistan.

The Trans-Caspian Pipeline will be a 2,000 km gas pipeline from eastern Turkmenistan through the Caspian Sea at depths of 200-300 meters, through Azerbaijan and Georgia to the city of Erzurum in Turkey. The project will cost $ 2.5-$ 3 bn and first phase capacity will be 10 bn cm, second phase will be 20 bn cm, and the third phase will have capacity for 30 bn cm. A number of complicated problems are preventing this project from moving forward.
Capital investment in the Turkmenistan-Iran-Turkey-Europe gas pipeline that will be 3,900 km long and by 2010 will supply up to 30 bn cm of gas is planned at $ 7.6 bn. The pipeline project, supported by a group of European companies, will begin at the biggest field in eastern Turkmenistan Shatylka and will pass along the Caspian, through northern Iran to the border with Turkey.

The regional grid pipeline systems, so called low and medium pressure pipelines used to supply gas to end consumers with minimum losses and strict metering of gas sales are a technological component of the gas pipeline system. The equipment and fixed assets of these grids is highly worn, however.
About 40 % of the grids operated by divisions of Regional Gas Transport System are about to fail. More than 26 % of the equipment and pipelines have been in use for more than 35 years while the normal operating life for steel pipe is 25 years. The pipelines age faster be-cause about 40 % of them do not have protective coatings. Half of the gas regulation points and a third of the distribution points are in need of repair or replacement.

Gas losses in the grid system are significantly above the standard losses of 3 %-5 % of gas. At many grid companies in South Kazakhstan region the so-called gas use for internal needs and losses were as high as 30 % of the gas supplied. Zhambyl region has registered several incidents of release of gas into the atmosphere due to the extremely poor condition of pipelines, which creates the threat of fires.
Only 8 of 14 regions in Kazakhstan receive natural gas supplies to some extent. This is due to the nature of the pipeline system that is geared mainly for the north and unevenness in the distribution of pipelines throughout the country.

By using a gas transport system that was built under the Soviet Union, Kazakhstan covers internal demand for gas mainly through imports. The western regions through which the main pipelines pass are supplied with Kazakh, Russian, and Turkmen gas. The northwest Aktyubinsk and Kostanai regions, are supplied from the Bukhara-Urals pipeline and Zhanazhol field. The most densely populated and industrial southern region receives expensive and erratic gas supplies in small amounts from Uzbekistan.
Kazakhstan will be able to cover demand for natural gas in all of Aktyubinsk region by increasing oil production (and thus gas production) at Zhanazhol oil and gas condensate field with recoverable oil reserves of 96.3 mm tons, 26.5 mm tons of condensate, and 132.6 bn cm of dissolved gas. Urikhtau oil and gas condensate field is located near Zhanazhol and has about 40 bn cm of free gas reserves.

Chinarevskoye field being developed by Zhaikmunai is located in West Kazakhstan region and has proven reserves estimated at 17.7 bn cm. The Teplovsko-Tokarevskoye group of gas condensate and oil and gas condensate fields with combined proven reserves of 24.9 bn cm is being developed by Stepnoi Leopard.
The development of the gas industry should enable the country to cover demand by residential consumers, utilities and other sectors using domestic natural gas and liquefied gas resources.

Under the plan for socio-economic development in 2004-2006, annual natural and liquefied gas consumption amid a 15 %-25 % in-crease in real incomes and annual GDP growth of 8 %-9 % will grow about 7 %-8 % and this could reach 10.3 bn cm of natural gas and 1.280 mm tons of liquefied gas by 2010.
The increase in natural gas consumers through the gasification program to 2010 will be about 480,000 customers.

Source: Asia Pulse
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