Kazakhstan - Country Commercial Guide
Oil & Gas Equipment and Services
Last published date:

Overview

According to the Oil & Gas Journal, Kazakhstan had proven crude oil reserves of 30 billion barrels as of January 2018–the 2nd largest endowment in Eurasia after Russia, and the 12th–largest in the world, just behind the United States. Kazakhstan has the largest proven oil reserves in the Caspian Sea region. Kazakhstan’s crude and condensate output in 2021 was 1.8 million barrels per day (bpd) in 2020 was 1.842 million bpd, and in 2019 was 1.965 million bpd. 

Kazakhstan is the largest oil producer in Central Asia and a major gas producer. Most gas is associated with oil production, and around one-third is reinjected in order to boost liquids output. Production of both oil and gas is dominated by three international projects that began operations in the 1990s.

Tengizchevroil (TCO) develops the Tengiz and Korolyov oil and gas fields in the Atyrau Region of western Kazakhstan. Tengizchevroil is a joint venture between Chevron (50% share in the consortium), ExxonMobil (25% share), KazMunayGas (20% share) and Lukoil’s LukArco (5% share).  The joint venture was formed in April 1993, when the Kazakhstan government granted an exclusive 40-year right to Tengizchevroil LLP (TCO) to develop the Tengiz and Korolevskoye onshore oil fields located in the north-eastern reaches of the Caspian Sea in Kazakhstan. The national oil and gas company, KazMunaiGas (KMG), is largely responsible for arranging the licensing tenders for oil and gas blocks.  KMG also plays a role in almost all contracts with foreign oil and gas companies.  KMG holds stakes in 47 enterprises conducting petroleum operations in Kazakhstan, including Tengizchevroil, North Caspian Operating Company (NCOC), Karachaganak Petroleum Operating (KPO), and the Caspian Pipeline Consortium (CPC).  

Around 80% of Kazakhstan’s oil production is exported. Almost all exports pass through Russia, mainly via the (CPC) pipeline to the Black Sea port of Novorossiysk. A smaller pipeline to China is currently underused, while minor volumes are sent by tanker across the Caspian Sea to Azerbaijan, where they can enter the Baku-Tbilisi-Ceyhan pipeline.

Current Market Trends

Kazakhstan’s oil production reached 1.8 million barrels daily in 2021, and nearly 44 percent of the state budget’s revenues come from the oil and gas sector. According to Worldometers data, Kazakhstan ranked 18th out of 127 countries in terms of daily oil production in 2022.  As of 2020, oil production increased by 6.84%, to 1.811 million barrels per day in 2020 from 1.695 million thousand barrels per day in 2015. Increased investment in oil projects by the government was the most prominent reason for the increase in oil production in the country.

Leading Sub-Sectors

Despite the challenges posed by the global slowdown in demand for oil & gas, opportunities continue to exist for U.S. companies across nearly every sub-sector associated with oil extraction, processing, and transportation in Kazakhstan.  Best prospects include drilling, research and data management, laboratory studies, oil spill cleanup technologies, and pipeline equipment and services.  About 80% of the equipment used in the oil and gas sector is imported, with a majority produced in Russia and China.

Opportunities

To date, Kazakhstan has limited technical expertise in offshore production and operations. This experience gap offers many opportunities for U.S. service companies in rig work, support infrastructure, and environmentally sensitive technologies. The Caspian Basin’s oil-bearing formations are generally quite deep (15,000 feet), under considerable pressure and often contain a high degree of sulfur and other contaminants, making U.S. technologically advanced drilling and processing equipment necessary.

The most promising sub-sectors include: offshore/onshore oil and gas drilling and production equipment; turbines, compressors and pumps for pipeline applications; valves; measurement and process control equipment for pipeline applications; industrial automation, control and monitoring systems for refineries, gas processing and petrochemical plants; seismic processing and interpretation; petroleum software development; sulfur removal and disposal technologies; well stimulation and field abandonment services; underwater repair equipment and oil spill containment equipment.  There are also significant opportunities in the provision of related services. 

Resources

For more information contact Commercial Specialist Azhar.Kadrzhanova@trade.gov