JPMorgan - KASE

APPENDIX C: The Oil Industry in Kazakhstan
The following statistics and information relating to the oil sectors in Kazakhstan have been
extracted from certain public documents and are provided for background purposes only.
Introduction
The oil and gas sector is of strategic importance to the Government of Kazakhstan, as it is the
principal source of the country’s export earnings and reserves, fiscal revenue and future foreign
direct investment flows. Traditionally the raw materials supplier to the Soviet Union, Kazakhstan
has sizeable, largely unexploited endowments of oil, natural gas and minerals. The Caspian
region is expected to yield growth in proven reserves which will result in an improvement in
Kazakhstan’s position in world oil and gas league tables in the longer term. Existing oil and gas
fields, and the prospect of major new finds, have attracted significant amounts of foreign direct
investment inflows. The Government’s stated intention is to preserve Kazakhstan’s position as the
major destination of foreign direct investment flows within the CIS.
Reserves
The actual level of oil reserves remains difficult to assess. According to Kazakhstan’s official
estimates, the recoverable reserves of oil are believed to total 21.9 billion barrels. However,
Kazakhstan’s methods of classifying reserves are based on the system employed in the former
Soviet Union and, accordingly, differ significantly from the standard international methodology.
The BP Statistical Review of World Energy of June 2001 estimated Kazakhstan’s total reserves at
the end of 2000 were 8 billion barrels, or 0.8% of world reserves, with a reserve/production life
of 31.1 years. Kazakhstan’s potentially large offshore Caspian Kashagan field will further add
reserves to the estimates. The Agip Kazakhstan North Caspian Operating Company NV (formerly
OKIOC), the international consortium which is exploring the Kashagan offshore oil field, places
potential reserves at between 8.8 and 49.8 billion barrels.
Production
Kazakhstan is the second largest oil producer in the CIS after Russia. In 2000, Kazakhstan
produced 258.8 million barrels of oil and gas condensate, which represents a 17.2% increase over
1999. In 2001, Kazakhstan produced 293.1 million barrels. It is expected that oil production will
reach 337.6 million barrels in 2002.
The following table sets out oil and gas condensate production levels in Kazakhstan.
Six months ended
30 June 2002 2001 2000 1999 1998
Oil and Gas Condensate (millions of barrels) .... 162.1 292.8 257.7 219.7 189.0
Production Volume (millions of tonnes) ........ 22.2 40.1 35.3 30.1 25.9
Refineries
Kazakhstan has three oil refineries with a combined capacity of around 136.7 million barrels per
annum, which were estimated to operate at an average of approximately 41% of capacity in
2001. The Atyrau and Shymkent refineries use Kazakhstan crude oil, while the Pavlodar refinery,
which is located a greater distance from Kazakhstan’s oil fields, has to obtain the majority of its
oil supplies from Russia. Utilization is estimated at 27% of capacity at the Pavlodar refinery, at
51% of capacity at the Shymkent refinery and at 47% of capacity at the Atyrau refinery
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