Oil boom a blessing and a curse for Kazakhstan

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Tengiz-NovorKazakhstan may be in a position to double its oil production by 2030, but at what cost? In a recent interview with Azerbaijan’s Baku-based Trend news agency, Oleg Yegorov, a senior fellow at the Institute of Economics at Kazakhstan’s Ministry of Education and Science, was quick to stress the negative environmental side-effects of a boom in oil production.
“The ruthless operation, especially under the bottom of the Caspian Sea, is very dangerous for the environment,” he said.
When asked if Kazakhstan should increase oil production, Yegorov answered with a resounding no. “Today, we sell a large part of the oil produced and do nothing to provide supplies for the processing industry,” he added. “It is good that now the oil prices fluctuate between $107-108 per barrel. But there were times when one barrel cost $7. It is possible that the oil extracted from shale in the United States will be sent to the external market and after five or 10 years Iran and Iraq will produce more oil and the prices will drop quickly,” he said.
Despite the eco-warnings, Kazakhstan’s government is eager to increase oil production. The country’s oil and gas minister, Uzakbay Karabalin, said Kazakhstan should tap its potential to become one of the top 10 largest oil-producing countries in the entire world. “By 2030 the level of oil production in Kazakhstan may exceed 110 million tonnes, which enables it to enter the top ten largest oil-producing countries in the future,” Karabalin explained.
Kazakhstan’s proven oil reserves stood at 30 billion barrels in early 2013, says an annual Energy Outlook report published by BP, a British multinational oil and gas company headquartered in London. According to the Organisation of the Petroleum Exporting Countries (OPEC), Kazakhstan’s oil production could hit 1.69 million barrels per day next year.
The largest hydrocarbon fields in Kazakhstan are Kashagan, Karachaganak and Tengiz (one of the largest in the world with up to nine billion barrels of recoverable oil.
According to Yegorov, Kazakhstan will need to construct a new modern refinery because the existing ones are “old, both morally and physically”. The government, however, has yet to decide whether it will build a new refinery.
There are currently three oil refineries – one in Shymkent (in the south), another in Atyrau (west) and the third in Pavlodar (north).

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