Canada sees oil and gas opportunities in Kazakhstan

Dec 21, 2006 01:00 AM

As the oil and gas industry evolves in Atlantic Canada, with its many ups and downs, many companies are looking further afield in an attempt to maintain the continuity vital to a developing offshore petroleum industry.
While the western Canada oil sands projects in Alberta hold an attraction for many companies, it is the onshore and offshore regions in eastern Europe, and in particular Kazakhstan that hold promise for several Atlantic Canadian companies. International Trade Canada organized its first trade mission for Atlantic companies to the Republic of Kazakhstan in 2005 and many opportunities have been identified in the past year and a half.

When people think of Kazakhstan they envision a landlocked country of mountains, steppes, rivers, and desert-like terrain. What is often overlooked is that Kazakhstan actually has a seacoast. In the west the country is bordered by the Caspian Sea, an immense body of salt water roughly the size of Europe's North Sea. Kazakhstan shares the coastline ofthe Caspian Sea with Russia, Azerbaijan, Iran, and Turkmenistan.
Kazakhstan is a country rich in resources. Huge mineral deposits, a growing and innovative agricultural sector and a mature onshore oil and gas industry have given Kazakhstan an economic leg up on its Central Asian neighbours. Recent discoveries of offshore oil in Kazakhstan's sector of the Caspian Sea are estimated to hold oil reserves of between 60 to 70 bn barrels.

When the offshore sector is fully developed in 2015, combined offshore and onshore oil production will elevate Kazakhstan to major producer status The Kashagan field, with recoverable reserves of approximately 15 bn barrels is the only offshore field currently being developed. First oil is expected in 2008.
Kashagan is located in the North Caspian Sea at a depth of two to three metres of water. Up to 120 additional offshore blocks, in water depths varying from 3 metres to 300 metres, are expected to be auctioned in late 2006 or early 2007.

“The resulting activity fromfurther exploration, delineation and presumably development of these new fields will generate opportunities of monumental proportion for offshore oil and gas service and supply providers in Kazakhstan,” explains Keith Warren, trade commissioner with International Trade Canada. Local companies who specialize in mechanical, marine electrical, and hydraulic repair and maintenance services will find plenty of work in the country.
In addition, metal fabrication and associated technical applications such as welding, pipefitting, and anti-corrosion protection and environmental services are also needed in Kazakhstan, he goes on to state. Warren also sees other business opportunities for companies that offer occupational health and safety training, marine navigation and engineering training services, sub-sea drilling equipment and support services' along with engineering design and seabed geophysical profiling.

The offshore environment in Newfoundland and Labrador is considered by industry to be unique because of the extreme weather and ice conditions that are difficult to predict. To cope with these conditions, industry developed innovative technologies that enhanced engineering design, fabrication, safety and marine training, ice monitoring, and environmental assessment in the east coast offshore region.
These are areas where Newfoundland and Labrador companies hope to attract interest from Kazakhstan companies and institutions, Warren goes on to say. Our first trade mission in 2005, really opened the eyes of the participants to the many opportunities available in the former Soviet country. Many of these companies have formed relationships with counterparts there and are realizing sound business opportunities.

There are presently three major oil and gasfields and a number of smaller fields in production in Kazakhstan, with the giant Kashagan field reported to be the largest discovery in the world in the past 30 years, and the fifth largest field in the world. Recoverable reserves are pegged at close to 9 bn barrels, with another 13 bn barrels expected to be produced through secondary recovery. The maximum reserves for the field are estimated at 50 bn barrels.
The country's largest onshore field is Tengiz, which is among the world's ten biggest fields. It has estimated reserves of 25 bn barrels of oil and 2 tcf of natural gas. It is operated by a consortium led by ChevronTexaco. In addition, the Karachaganak oil and gasfield located near the Russian border in the north of the country contains 2.4 bn barrels of oil and 16 tcf of natural gas. The 11 oilfields in the south of the country contain proven reserves in excess of 500 mm barrels of oil and produce more than 140,000 barrels of oil a day.

While the majority of onshore deposits in Kazakhstan have been developed, the offshore deposits are still untapped. Under the recently introduced program for the development of the Caspian Sea, the government of Kazakhstan will be putting about 120 offshore blocks up for lease and will maintain a 50 % share of allinvestments with foreign companies.
The Kazakh government is presently looking to increase local content in the oil and gas industry and will not consider contracts that do not meet local content requirements. Therefore, in order to be successful, Canadian companies should be seeking some form of joint venture partnership, explains Warren. It is important to be proactive and meet with project operators in order to get in the vendor lists for large projects in the early stages.

Warren also advises local companies to develop good relationships with the various local governments, since they can use their power to help or hinder possible joint ventures.
The Marine Institute in St John's is actively involved in the Kazakhstan offshore region through its Offshore Safety and Survival Centre. The centre is offering a comprehensive range of safety and emergency response training courses to the offshore petroleum, marine transportation, and land-based industries in Kazakhstan. According to centre director Bob Rutherford, we have identified a business opportunity in Kazakhstan and have been providing training for offshore personnel for the past number of months.

The industry in that country is emerging rather quickly and basic petroleum-related training courses are vital for the safety of the industry, he goes on to say.
“We have developed a working relationship with the university in Kazakhstan and we are in the process of investigating setting up a training centre there.”

Source: The Oil & Gas Magazine Online
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