In Kazakhstan oil and gas industry is a key, and we will long depend on it. But now the policy is that we want to milk a cow and have a lot of milk, but leave the cow without feeding, writes Galim Khusainov, Director of LLP BRB Invest.
“We have decided to reduce the role of the oil and gas industry in the economy. However, doing this, we do not increase the non-oil sector, but reduce the oil and gas sector, which, of course, affects the country’s economy,” the Kazakhstani expert noted.
“Kazakhstan is one of the few countries where oil extraction falls in the last three years. We can proudly state that we help keep world prices for “black gold”, though it is rather a consequence of an accident and illiteracy in the field of oil and gas policy.
Paradox №1. After the launch of Kashagan, of course, oil production will increase significantly, but most of this increase virtually will not bring any good to Kazakhstan. According to the PSA contract, we will not get a profit from the Kashagan oil until we reimburse all the capital costs and taxes, and at current prices it will be very long.
Kashagan oil, which is owned by Kazakhstan, has long been sold for the advances received, so we cannot claim it either: it will cover the KazMunayGas debt, which it took for the development of the Kashagan field.
Paradox №2. Now in Kazakhstan two fields (Tengiz and Karachaganak) provide half of Kazakhstan’s hydrocarbon production and with the introduction of the Kashagan field the share of large deposits of oil which does not flow into Kazakhstan will account for much more. Therefore, excluding the three largest fields, the oil output in Kazakhstan fell, falls and will fall.
However, the economic authorities of the country are doing everything to cause small and medium-sized deposits to degrade and disappear.
In particular, the problem of the fourth refinery is not that there will be no demand for the fuel. Oddly enough, the problem of the fourth refinery is the lack of raw materials. Nonsense, is not it? But this is so, because all subsoil users have registered shares of compulsory deliveries to the domestic market, and it will be difficult to increase them.
For the past seven years since 2009 there have not been new contracts for exploration and production in Kazakhstan. Every oilman knows that from the start of exploration to the commencement of commercial production there are at least five to seven years. This means that in the near future we will have a drastic failure of mining (excluding large deposits, which do not deliver oil to the domestic market).
That is the paradox in the oil industry.