№ 5 (49), 2011 - KazEnergy

according to analysts and market players,the Association of Energy has acquired itsown weight, meaning and impact of domesticand global scale through its commitmentto provide an interactive platform to representativesof business and government. Atthe same time the efforts of the organizationmanagement to create conditions for fruitfuldiscussions are not limited to the EurasianForum, although it is certainly a kindof a crown of the communication aspirations.Welcome Message from the President of theAssociation Timur Kulibayev to the Forumdelegates provides a comprehensive view ofstrategic and tactical problems to be solvedduring the event."In 2011, the Republic of Kazakhstan celebratesthe 20th anniversary of the stateindependence. Over the years our countryhas established itself as a sovereign authoritativedynamically and steadily developingcountry and a full member of the interna-2006Now analysts' forecasts are fully confirmed bythe reality - the value of the Forum can notbe overestimated, as evidenced by its six-yearhistory. So the first Eurasian Energy Forumof KAZENERGY, held in 2006, marked a newmilestone in the development of fuel-energycomplex. For the first time in an atmosphereof constructive debate an attempt wasmade to define "trouble spots" of growth, tooutline prospects for further development.Then Timur Kulibayev suggested the thesis:Kazenergy Association is ready to act as amoderator between state authorities andenterprises of the energy sector. Later, theforecasts made by the Chairman of theAssociation were brilliantly realized. That year,the future Prime Minister of Kazakhstan, KarimMasimov, lashed out at the violators of theenviron-mental laws and gave the outline of anumber of innovative and legislative programsaimed at maintaining the ecological balance.Further, this line of work was developed in theAssociation activities on development of theEnvironmental Code of the country, which hadbeen laid down strict rules of "zero discharge"and a number of other important points. Thefuture head of government also stated theneed to improve the degree of oil and gasprocessing. "As a part of the petrochemicalcluster in West Kazakhstan, the Republic'sgovernment is able to support thosebusinesses that are ready for more advancedprocessing of raw materials, the developmentof petrochemical industries in the country.Your efforts on joint ventures establishmentwould make an invaluable contribution tothe development of Kazakhstan," - said Mr.Massimov. And this task is implemented byKAZENERGY. The Association has become oneof the initiators of the First Caspian Forum onoil refining and petrochemical developmentand a special conference in Astana. TheAssociation established a special workinggroup that is dedicated to this issue. The wayswere defined to develop relationship betweenindustrialists, know-how scientists, and theKAZENERGY11

kazenergy forumtional community. Considerable contributionto these processes made by the energysector of Kazakhstan's economy that has becomenot only the engine of economic growthand modernization of the country, but also agood example of cooperation between stateinstitutions and foreign investors and privateentrepreneurial initiative.Since the early 1990s, nearly four-fold, to79.7 million tons, annual production of oiland gas condensate has increased, whichgreatly contributed to more than ten-foldgrowth of the national economy. Together,we nearly doubled the share of Kazakh-stanin the global oil market, and in uranium miningthe country reached a leading position inthe world, 17.8 thousand tons in 2010. Alreadyin 2015 the oil and condensate productionin the country will reach 95 million tonsper year, natural gas production - more than59 billion cubic meters per year"- states hiswelcoming speech.Timur Kulibayev also stressed that duringthe years of independence, a stable and dynamicstructure of the energy sector formed:Kazakhstan managed to attract impressiveinvestments, to balance the interests of participantsin the oil and gas market, namelypublic and private, domestic and foreign,multinational corporations and small businesses.At present, domestic priorities havebecome the innovative development, thestrengthening of local content, social responsibility,effective protection of the environment,the synthesis of basic scientificresearch and production infrastructure."In connection with this subject of the VIKAZENERGY Forum is very symbolic -" Kazakhstan:20 years of sustainable growth,new horizons for investments and cooperation".I am sure that the Forum will contributeto more effective co-operation of industrializedand producing nations, facilitate thedevelopment of mutual understanding andinternational partnership," - concluded theChairman of the Association.The importance of the changes occurring,invaluable experience of Kazakhstan powerindustry was stressed by CEO of the «KazenergyAssociation», Mr. DzhambulatSarsenov. According to him within 20 yearsof independence, all government policy documentshave emphasized the development ofthe energy industry, which is "followed byoil and gas engineering, infrastructure projects,oil pipelines, gas pipelines. The moneyinvested by investors in oil and gas sectorbanking business. Another serious task posedby the Prime Minister was the development oflocal content in the oil service sector. "Largeoil and gas and energy sector companies shallserve as a catalyst for the economic growthand development of small and medium-sizedbusinesses and domestic machinery," - athesis voiced by the future Prime Minister,assuring that the government will revise lawsto ensure the foreign investors comply withtheir commitment to attract local contentand personnel from among the citizens ofour Republic. The Prime Minister kept hispromise. But the Association made the localcontent issue a constant topic of discussionat the Coordinating Council involving foreigninvestors and international experts. The issueof Kazakhstani personnel training was selectedone of the priorities in the activities of theAssociation and its members. The result wasthe annual scientific conference on humanresources, conducted by a private institution -the Unified Personnel Development Centre ofNC KazMunayGas supported by KAZENERGY.2007In September 2007, the second KAZENERGYEurasian Energy Forum was held, purposedat the discussion of topical issues of oil,gas and energy sector: review of analyticalinformation, work out of proposals andrecommendations, coordination of commonapproaches to effective legal mechanismsand practical tools of the key economy sectorof Kazakhstan. During the event, a famous"Kashagan issue" was raised. Speaking ofthe oil and gas industry development, theeffective Prime Minister mentioned theproblems associated with the developmentof the Kashagan field. Karim Massimov said:"The Kazakh government is ready to engage inan open dialogue to address project issues atthe early stage, while I want to say openly, we12 № 5 (49), 2011

in general served to the development of localindustry and production," - he said. Also,Mr. Sarsenov stressed that there is "thequeue" to invest in such projects as Kashagan."According to Dzhambulat Sarsenov,investment horizons should be extended tothe industrial projects, "As the Program offorced industrial-innovative develop-mentinvolves the creation of a large number ofprojects, new production capacity that willensure the efficient operation of oil and gasindustry and energy in general."OnKazakhstan'sfield workmajor Japanese,American,European Asiancompaniesoperate using thelatest technology.In the epicenter of global energydialogueThe first day of the Forum, October 4 notonly lighted the "Kazakh energy miracle"and promising areas of the industry, butalso identified the new vectors of cooperation.The participants got the opportunityto discuss the profile problems of the region,in particular the sensitive issue of collaborationin the development of the Caspian shelf.Also there were presentations on forecastingand long-term partnership alliances in Eurasia.Along with others, the speeches raisedsuch specific issues of the industry, as theformation of prices for oil, gas and other energysources, peculiarities of contracts andinvestments of the largest oil fields (for example,Karachaganak, Kashagan and Tengiz),and the prospects for innovations. Asfor the innovation, this is the important arearepeatedly voiced as a priority in the institutionssubordinate to the National WealthFund, led by Timur Kulibayev. As you know,the largest Kazakh mining companies are apart of the National Wealth Fund, and forthem the strategies identified at the Forumplay an important role. "Years of hard work,today let us boldly and proudly speak ofprogress in the petroleum and energy industriesof our country. Kazakhstan has securedits status as a leading player in the globalenergy market and has engaged in the dialogueon an equal footing with the globalindustry leaders. National companies havesuccessfully implemented a number of majorpipeline and energy transit projects in thepast few years. Calibrated, well thought outdevelopment strategy allowed raising theindustry's quantitative indicators, providedthe necessary prerequisites for its highquality innovative breakthrough. By itself,the oil and gas sector is the engine of innovation,since our entire complex fields arethe objects of innovation, so they take theadvantage of the latest technology. On ourfield work major Japanese, American, Euwillbe tough to stop illegal actions of thosewho try to violate the rules of the Ka-zakhstanlegislation and ignore the national interests ofour country." The situation with the Kashaganproject was valued by the Government asa special case, the legitimate interests ofpotential and actual investors in Kazakhstanwere not impacted, and as practice showed,were not injured. "Kazakhstan is a reliableand stable partner committed to contractualobligations, and acting for their stability. TheKazakh government will adjust its positiononly in respect of those who are not able tofulfill the obligations," -the Prime Ministerstated.In addition, following the II EurasianEnergy Forum the Memorandum on theestablishment of the Caspian InformationInitiative was signed. The Memorandumsuggested a mutually beneficial exchange ofinformation among the initiatives participants;the establishment of a dialogue platform todiscuss the challenges faced by the region;support of contacts and increase of the areasof cooperation between the media, publicorganizations and commercial companiesof the Caspian region. Also, in the course ofthe Forum, the Chairman of the Association,Timur Kulibayev was awarded a certificate ofthe honorary member of the Caspian IntegrationBusiness Club. This organization, whichunites more than 100 companies of thirtystates, established to promote regional tiesamong nations, strengthening of contactsbetween government agencies and privatebusinesses, as well as the development ofintegration processes in the energy and theenvironment protection.2008During the III Eurasian Energy Forumorganized under the "Global Challenges -Energy Solutions" theme, it became knownthat Kazakhstan joined the World PetroleumCouncil (WPC), uniting 60 national committeesof various countries with developed oil andgas industry. As WPC President Randall Gossennoted in a press conference held followingthe forum, our country became a part of theworld's leading nonprofit organization headedby him. "We are very pleased that Kazakhstanhas become a member of our family, becausethe countries in the World Petroleum Councilrepresent 95 percent of global oil and gasproduction." - He said. The honored guestpraised the Forum. He stressed that "thelevel of the solutions made meets the highestKAZENERGY13

kazenergy forumIn 2009 a widedebate wasprovoked byappearance ofex-ChancellorGerhardSchroeder on gasissue.ropean Asian companies operate using thelatest technology." - noted Kulibayev in oneof his speeches.On the second day the participants werediscussing the tragedy at Fukusima-1, anuclear power station, those precautions,which the world's energy community shouldlearn from a stern lesson. Delegates alsotalked about the development of the nuclearindustry, the possibility of energy transportto Europe from renewable sources and muchmore. The special role of the Forum wasassigned to the environmental issues, thesearch for technological solutions of environmentalprotection, as well as those innovationsthat are the participating enterpriseshave developed under their environmentallyfriendly programs, including the importantplace given to the local content in the industrialareas.Traditionally, in the framework of the Forumserious disputes arise, information extremelyimportant for the business worldcommunity is sounded especially due to themoderators and speakers. For example, in2009, a wide debate was provoked by appearanceof ex-Chancellor Gerhard Schroeder ongas issue. As for present IV Forum the onlyname of the co-host arouse interest to theevent have becoming a breaking news forthe international mass media. Larry King -a world famous journalist, the master of livingand contensive interview, together withthe Chairman of the KAZENERGY Association,Timur Kulibayev co-moderated the sectiondevoted to energy geopolitics of Eurasia,Challenges and New Horizons. Karim Massimov–Kazakhstani Prime Minister, as wellas EU Energy Commissioner, Günther Oettingerappeared as main spokesmen. Concerningthe sore problem, "the issue of theCaspian", the President of the World PetroleumCouncil, Randall Gossen, an expert onenergy security, Platts, John Roberts, SeniorAdviser to the Special Envoy for EurasianEnergy (U.S. Department of State), DanielStein, president of the National CompanyKazMunayGas, Kairgeldy Kabyldin, andothers presented their views. To the topic ofinvesting, which is against of financial instabilityand political transformation of theworld is particularly relevant this year wasgiven a separate plenary session "New horizonsfor oil and gas industry: investing ininnovation and new technologies". As a moderatorfor this part, Euronews journalist,international standards." It was also statedthat the oil and gas companies should sharegeological information considered confidentialregarding the national sector of the CaspianSea in order to avoid future failures in drillingexploratory wells on the shelf. This opinionwas stated by the President of MeridianPetroleum, LLP, Baltabek Kuandykov. "Allparticipants in petroleum operations needexchange of geological information obtainedin each national sector and in the whole basin.It is time to review the list of confidentialgeological information," - said Mr. Kuandykov.His initiative was strongly supported by theparticipants.The participants again raised the topic ofKashagan, Karim Massimov and Kulibayevvoiced clear predictions. "As a result ofcomplex negotiations with all parties of theConsortium, the Government substantiallyincreased the state share in the project, upto 16.83 percent, and in addition, our countrywill receive compensation for changes in thetiming of its implementation. By October25, all legal formalities to be completed," -said the Prime Minister. A little later, duringa special press conference, the Chairmanof the Kazenergy Association added to thePrime Minister\s words. He commentedon the completion date of the Kashaganproject. "October 2013 is called, but thecommissioning is impossible in winter time.We are talking about the fact that by the endof 2013 all facilities should be ready to start.We expect that in 2014, Kashagan will produce450,000 barrels per day. At this point, the onshoreand off-shore facilities should be ready,transportation issues resolved." Kulibayev alsoexplained that the issue mainly lies in the factthat the Consortium members were able tostop the escalating cost of Kashagan, whichhits the project economics and may affect therevenue to the state budget.In addition, on the press conference tookplace after the Forum, Kulibayev acted notonly as the first-rate government official andbusinessman, but also as one of the mostskilled analysts in the global oil sector. Thehighest level of ambitions and their consistencythe most eloquently was presented by "callingcard" of the KazEnergy Association - the justcompleted Forum. Mr. Kulibayev gave somehints that characterize him as a player on theworld market. "The tax burden on oil and gasindustry will actually increase. However, ourAssociation had worked all year to ensure thatbills took into account the need for sustainablemining, and the industry remained attractivefor investments. We managed it: Kazakhstanis still more attractive to investors than, for14 № 5 (49), 2011

Niall O'Reilly had been invited. The forumparticipants had a possibility to obtain theopinion of top management of the leadingworld energy giants on such issues as theimplementation of experimental-industrialdevelopment of the Kashagan field, the oiloperations in extreme-cold conditions andnew growth opportunities for liquids productionat the Karachaganak field. In thesection of nuclear energy the views wereheard of the chairman of the National Committeeof Japan WEC Teruaki Masumoto,the Manager of INPRO, IAEA Randall Beatty,president of the national company «Kazatomprom»Vladimir Shkolnik and otherdelegates.Legitimate ExpectationsAddressing the delegates, head of the Associationof power engineers, Chairman of theBoard of National Wealth Fund «Samruk-Kazyna» Timur Kulibayev noted a steadyand gradual development of both the Forumstructure and its scale.- This is an interesting platform, where it isgiven a possibility to speak for our and foreigninfluential politicians, to share experienceon how looks the sector developmentfrom political point of view, as well as forindustry representatives, international organizationsand experts. It is very gratifyingthat the subject is expanding, so todayit is held a very important discussion on thedevelopment of nuclear industry, on developmentof alternative energy sources - theseindustries, we are developing in Kazakhstan,- said Mr. Kulibayev, and his wordswere fully confirmed at the event that tookplace in October.The Head of "Samruk-Kazyna" NWF onceagain stressed the importance of diversificationof the economy of Kazakhstan and thesignificant role in this process assigned tothe National Welfare Fund headed by him.- The crisis in Kazakhstan is largely overwhelmed,that’s why the head of the stateset new tasks towards the Fund – they arecorporate governance, economic diversification,introduction of an innovative culture toour subsidiaries and, as already noted, thePeople's IPO. When we talk about diversification,we say that we have more than 60%of revenue from the commodity sector, so thebasic investments and industrial programsshould be invested to the development ofnon-oil sector. In particular these are ourexample, Russia. Many Russian companies asLUKOIL, Rosneft, Gazprom Neft want to workin our country and to increase investment.Now investors are focused on the Caspianshelf of Kazakhstan. But it is not elastic; we cannot sign new contracts indefinitely. Therefore,I advise investors pay attention to other areas.Like the shelf of the Aral Sea, where there arealready encouraging results of exploration,the land of Kazakhstan: western, central,southern part of the country "- he said inparticular. Future showed the accuracy ofthose predictions.The final joint statement was adopted at thecompletion of the Forum, which stressedthe importance of fruitful cooperation for itsdelegates."Natural energy resources and createdproduction, scientific, technical and personnelpotential of the energy sector of Kazakhstanis a key national asset. Effective use is anecessary foundation for the transition pathof sustainable development, ensuring thewelfare of the people. To take full advantageof this priceless treasure, to ensure longtermenergy security of Kazakhstan in today'seconomy, to build the foundations of longtermstable energy supply and keep thestate's energy independence, the delegatesare going to fully support the implementationof a systematic and effective nationalenergy dialogue ", - noted the statement.Commenting on the results of the ThirdForum to the media, the General Directorof the KazEnergy Association, DzhambulatSarsenov said with a well-deserved triumph:"This year the level of the Forum was highenough, it involved the President of the WorldPetroleum Council, the largest organizationof oilmen around the world. The RegionalDirector for Europe and Central Asia Region,World Energy Council attended too,"- said D.Sarsenov. The General Director said that therepresentative of the World Energy Councilvisited Kazakhstan for the first time, and statedunprecedented "rush" of the representativesof foreign analytical circles, studying the oiland gas market.KAZENERGY15

Nazarbayev set the task of reducing energyintensity to 10% in Kazakhstan by 2015.In this context, the MEP developed a Planof low carbon economic development of therepublic and industrial facilities introducedin the framework of the forced industrializationProgram undergo state ecological expertisefor compliance with environmentalrequirements.In particular, the Sixth Forum has establisheditself as a real discovery for the playersof the nuclear industry, as announcedTimur Kulibayev, stressing that the «Kazenergy»Eurasian Forum has become moreauthoritative and informative. Even againsta background of forum’s information abundancechairman of the Association createdthe plenary session devoted to the prospectsof the nuclear segment, which washeld jointly with the World Energy Council.His confidence in the brilliant future ofKazakh uranium and atom was joined byPrime Minister Karim Massimov, who saidthat the country is also taking the first stepstowards the development of nuclear energy.This June the Government approved theProgramme for the Development of AtomicEnergy which provides the construction ofthe first Kazakh nuclear company.- I believe that nuclear power of Kazakhstanhas a great future. Kazakhstan, as a reliableenergy partner, connecting East and West,plays an important role in global energy security.We continue to promote the diversificationof routes of energy transportationto final markets ", - he said. "Kazakhstan isaware of the significant role of the energysector in improving living standards and enhancingeconomic development. At present,the industry faces unprecedented challenges.But I am confident that by working in ateam, government, business and society willbe able to withstand the energy challengesof the XXI century ", - stated the Prime Ministerof the RK.Head of nuclear energy development Departmentof IAEA Thomas Koshy said the IAEAis ready to make recommendations to Kazakhstanin the case of nuclear power plantconstruction in the country. In particular, heexplained that over the next six months theIAEA will publish an annual report on theThe IAEA isready to makerecommendationsto Kazakhstanin the case ofnuclear power plantconstruction in thecountry.2010The V Eurasian KAZENERGY Forum was called"The Energy map of Eurasia: The Balance ofRisks and Opportunities", and the course of theevent reflected this difficult problem at a fullrate, allowed the participants developing bestpractices. The importance of deep and steadyintegration of Kazakhstan's energy sector intothe global structure was emphasized in thewelcome address of one of the organizersof the Forum, the future head of NationalWealth Fund Samruk Kazyna, Timur Kulibayev."We need to examine the future of a newgeneration of energy, not to be the hostage,but the participants of the changes takingplace. We must learn the lessons of the past,investigate and understand how recent globaleconomic crisis changed the world economy,what role can be played by the energy in itsrehabilitation and post-crisis development. Itis important to realize how rapidly the globalenergy market is developing. Today, the role isincreasing of both the new centers of energysupply, and new sources of energy: atom,shale gas, solar and wind energy and others,"- he said.Acknowledging the priority of sustainablegrowth of oil and gas and energy sectorof Kazakhstan in the Eurasian region,strengthening the role of Kazakhstan as theguarantor of the continental energy security,the importance of environmental safety,development of new energy sources, aswell as testifying to the unity of views on allissues, The Forum participants stated theirwillingness to solve the key tasks. In particular,the report of the Chairman of the Board, JSCNC KazMunayGas, Mr. Kabyldin provideda deeper look at the rapidly expandingprospects of cooperation. "This event isof particular importance in the context ofthe deepening of the international energydialogue and contributes to the furtherapproval of the mutually acceptable principlesof business cooperation and exchange ofexperience in the energy sector. Energy todayis one of the main topics of discussion in theworld. Especially relevant are the issues ofenergy cooperation in the Eurasian region.Also, the modern world community paysspecial attention to the issues of transit andtransport capacity, as an integral componentof the global and regional energy security," -said the Head of the National Company.Mr. Kabyldin also highlighted the special roleof Kazakhstan in the energy in-tegration."Today's fast-growing energy consumption,the amount of stocks of energy and locationKAZENERGY17

kazenergy forumIn 2011 expertsand analystsnoticed that theEurasian Forumwas held entirelyas a bridgebetween thegovernment andinvestorstechnologies most appropriate for Kazakhstan,noting that there are large reactorsand small reactors, reactors on thermal neutronsin our country. The deputy Chairmanof JSC "NAC"Kazatomprom" Sergei Yashinreported that nuclear power plant in Kazakhstancan be built in the next 10 years.- In the near future we will have to definethe role and place of nuclear power in thecountry's energy balance, to determine theplacements of nuclear power plants, selectoptimal nuclear technologies, primarilysafe, and also solve large complex problems,ranging from personnel training and developmentof standard documentation for use ofnuclear energy and ending with the possibilityof participation of Kazakh enterprises inthe construction of nuclear power plant ", -tells Mr. Yashin. Speaking about the longerterm development of the nuclear industry,experts drew attention to a trend of increasingdemand for uranium in 2030. In thisregard, raises the question: who is able toprovide a supply? Kazakhstan, according toVice-President of JSC "NAC"Kazatomprom",as one of the leading countries in the fieldof uranium mining, will be able to get markof 25 - 30 thousand tons of uranium productionper year. In 2011, the national company"Kazatomprom" plans to produce about 20thousand tons of uranium.Characteristically, the Forum has long agoattracted the attention of not only journalistsbut also leading investors - in framework ofthe event each year genuine sensations areborn and this year is no exception. At one ofthe last meetings of leaders of Energy underthe auspices KAZENERGY Prime MinisterKarim Massimov announced the five itemson the Kashagan project, which were subsequentlyused as a basis in the negotiationprocess. In that year, experts and analystsnoticed that the Eurasian Forum was heldentirely as a bridge between the governmentand investors, excellent dialogue platformwhere you can not only discuss but also tiebusiness contacts and get useful informationat first hand. Whereas from year to yearactuality and relevance of the Forum is justgrowing, excitement around this event hasreached impressive heights. The EurasianForum truly become the calling card of Kazakhstan,its natural resources, the abilityto conduct business in the legal field at thelevel of world standards.are of special strategic importance for oil andgas region. Due to its geographical locationand the availability of substantial reservesof mineral resources Kazakhstan is underscrutiny geopolitical and economic interestson the global energy arena. Our state holdsa special position in the Eurasian space, as a"bridge" between the main markets of rawhydrocarbons (Western Europe and East Asia)and the countries that are major suppliers ofhydrocarbons (the countries of the MiddleEast, Russia)," - he stressed.The delegates of the 5th Forum, expressed thefirm belief that the meetings, which allowedclarifying the objectives, principles andstrategy of the energy sector progress underconditions of the post-crisis development, willhave a positive impact on the strengthening ofpartnerships, creating a favorable investmentclimate, improve environmental protectionand ecological liability, will give new impetusand the intergovernmental cooperation.In conclusion it’s important to note, theEurasian Forum - one of the most recognizedglobal brands of Kazakhstan. The Conferenceselaborate recommenda-tions and solutionsto enable to intensify the industrial dialogue,to ensure the stability of energy sector,to strengthen international cooperation.Undoubtedly, KAZENERGY Associationmanaged to secure its status as a center of theindustrial dialogue, which provides oil and gasindustry with additional features of stable andbalanced growth.18 № 5 (49), 2011

kazenergy forum20 years –Developmentof the Energy Sectorof KazakhstanAchievements. Problems. ProspectsASauatMynbayev,Minister of Oiland Gas of theRepublic ofKazakhstanccording to the proven oilreserves, Kazakhstan isranked the ninth in theworld. (Slide 1). This data isfrom independent resources.I believe we have groundto expect an increase in reservesin the future takinginto account the estimatesof our geological reservesand the large-scale geologicresearch.We had somewhat reductionof the reserves before 2001,but later on you can see anessential increase. I must say, this increasewas mainly due to opening of Kashaganfiled, and increase in reserves at Tengiz field.In general, this demonstrates the successachieved in the geological sector of Kazakhstan.The crude production increased over threefoldin 20 years, the gas production – fivetimes. (Slide 2). The volume of hydrocarbonsis expected to increase essentially in the future.In these terms Kazakhstan is one offew states with the production peak ahead,At the present slide, do not be confused bythe last line. Production growth of commoditygas is non-essential, in fact. The issueis that our gas is mainly associated gas. Itmeans that for the purpose of full extractionof liquid fractions, a part of the gas producedis injected back to the stratum.However, firstly, this gas may be extractedin future. Secondly, in case of the changes inthe commercial marketing terms or the implementationof technological innovations,the production volumes of gas may be easilyincreased.At Tengiz, we are currently working on theFuture Growth Project, which is planned toincrease the extraction volume from current26 million tons to 36 million tons per year.I assume, it will be submitted for review tothe authorities.Great work on development of Kashaganproject has been conducted. The commercialproduction is expected to start in December2012 – June 2013. As you know, the productionvolume at the first stage of the project isexpected to reach 370 thousand barrels perday with potential increase to 450 thousandbarrels. Yes, the uncertainty still remains20 № 5 (49), 2011

with regard to the consequent second stage.But, I believe that close cooperation betweenthe contracting companies and authorities,the compliance of suggested decisions to thebest world practice, consideration of mutualinterests may provide the project with thegreater success.Regarding N Block: our national companyKazMunayGas with 51% share worksin partnership with ConocoPhilips andMubadala companies. The first well ( R-1)has been already drilled in RakushechnoyeSea and the first confirmation of hydrocarbonspresence received. The explorationoperations are conducted in full compliancewith the work program and we expect theirsuccess continuation.Regarding Zhemchuzhina structure: KazMunayGasis operating in partnership withShell (55%) and Oman (20%). Besides, theexploration works proved presence of oil andgas on Auezov and Khazar structures. Theproject parties are preparing the field developmentstrategy,Satpayev and Zhambyl blocks are the initialstage of exploration, however, we expect confirmationof essential reserves of raw hydrocarbondeposits. Satpayev structure is beingdeveloped under the cooperation with theIndian ONGC Videsh Limited (OVL) withthe share of 25% to 35%. Zhambyl Block isbeing developed in cooperation with the KoreanNational Oil Corporation (27%).In the near future, we are going to commenceexploration in Abay Block with theNorwegian StatOil; later, at Khvalynskoyeand Tsentralnaya structures in the partnershipwith the Russian GasProm and LukOil.The issues with the Russian state authoritiesare remaining open. Our plans are tocreate a partnership with the Italian ENI atShagala and Isatay Blocks.Finally, I should note the NC KazMunayGasin 2010 and 2011 opened fields at Liman andUrikhtau structures. They are under detailexploration and evaluation process.The register of the Ministry of Oil and Gasincludes 61 exploration contracts. The geologicalrisk always exists. Dry wells at Tyub-Karagan and Kurmangazy structures verifythis fact. Nonetheless, we definitely havea solid ground to account for a significantgrowth in reserves and production of liquidhydrocarbons.The environmental aspects of the activityrelating to the hydrocarbons production becomecrucial due to the increase in production.I would like to show the dynamics of oneindicator only, the volume of the flared gas.Note that these volumes are in inverse rationto the production and in 2010 the volume ofthe flared gas achieved 1.4 billion cubic meters,which was 3.6% of the produced gasincluding the volumes of technologically inevitableflaring. This indicator is lower thanlet’s say in Norway, but it is higher than inmany countries, including those with a longoil extraction history. I must note that thelegislative requirements to this aspect willbe strengthened.Kazakhstan does not have access to the opensea. Therefore the export access, mainly providedthrough pipelines, is essential. This isa map of the existing pipeline system.The first direction is Atyrau – Samara withthe following entry to the Eastern Europevia Russia. The second is CPC with the accessvia the Black Sea. The third is an operatingoil pipeline to China, Atyrau – Kenkiyak,Kumkol – Atasu – Alashankou.The fourth goes via Aktau port to Makhachkala,Baku and Neka. Then via the Black Seathe pipeline Baku – Tbilisi – Ceyhan goes tothe Mediterranean, through SWOP operationwith Iran it goes to the Persian Gulf.With the commencement of the second stageof Kashagan, we expect to launch a logisticroute of Kazakhstani – Caspian TransportationSystem (KCTS).The third slide demonstrates the actual andforecasted transportation volumes of the exportedoil. We have done great work in thisfield during 20 years of our independence.It includes CPC construction, Aktau portexpansion, opening of a conceptually newAt Tengiz, we arecurrently workingon the FutureGrowth Project,which is plannedto increase theextraction volumefrom current 26million tons to 36million tons peryear.KAZENERGY21

kazenergy forumWe areplanning toconstruct anew oil refineryplant during theperiod of 2019– 2020 underthe Industrialprogram.route between Kazakhstan and China, enlargementof rail road supplies.Speaking of a forecasted period, we will beable to provide full export capacities subjectto the implementation of all the plans existing.As you know, CPC expansion projecthas been started, the capacities of 52 milliontons per year of Kazakh oil, indicated on theslide, will be supposedly achieved in the firstquarter 2015.A linear section of Kazakhstan – China pipelinehas already been completed. The capacityincrease up to 20 million tons is the issuerelating to the construction of additional oilpumping stations. This project may be easilyimplemented as the resource base increases.The slide does not include Kashagan productionvolumes at the second stage, but theyare hardly possible prior to 2019. Accordingly,KCTS is not included either. Theseprojects are mutually related.Thus, considering the potential of the Kazakhstani– Caspian Transportation SystemSlide 1.Proven oil reserves (billion t).Source: BP Statistical Review of World Energy June 2011operation, we assume that the issue of theplanned export routes is clear. Obviously,each project has some operational, technicalissues, which will be solved in a timely manner.We are committed to it. And we see suchcommitment at our neighbors, partners andinvestors.On the fourth slide you see the actual andforecasted dynamics of oil supplies to the domesticmarket. This volume is processed onthree Refineries in Atyrau, Shymkent andPavlodar. Their capacities are not enough.Today, a part of high-octane petrol consumeddomestically is imported. Such dependenceon import causes the domestic supplies haltingduring the fuel crisis or price explosions,as it happened this summer.Of course, building an open economy requiresus following the global price trends.However, we can and must protect the internalmarket from price surge.For this purpose, the government, thoughlate, started the implementation of the Programon the expansion and modernization ofthese refineries. According to this Program,the reconstruction of all three refineries isprovided for by 2015. This will, firstly, allowfor an increase the refining capacities up to17.5 million tons, secondly, deepen the oilrefining to produce all types of oil productsinternally, and thirdly, provides for the productionof benzene complying with Euro-5standard. The works on the refineries havealready been started.We are planning to construct a new oil refineryplant during the period of 2019 – 2020under the Industrial program.For 20 years the gas consumption increasedmore than twofold. We expect such twofoldgrowth during next decade.22 № 5 (49), 2011

kazenergy forumGeopolitics of EurasianEnergy: Challengesand New FrontiersToday the world of energy is experiencing huge change andchallenges. It is evident that energy markets are becomingmore and more globalised.СSelimKuneralp,Chairman of theEnergy CharterConferenceonventional fossil fuelsare depleting; and climatechange provokes us to developand seek new sourcesof energy. In the meantime,the Fukushima accident hashalted the so-called nuclearrenaissance of the earlyyears of this millennium.Moreover, hydrocarbon productionhas experienced acertain slowdown due tothe events surrounding theArab Spring earlier thisyear.According to the International Energy Agency;we are about to live through a golden ageof gas. More and more players are now involvedon the energy markets. Internationalcompanies, national companies, states,NGOs, all have a stake in the developmentsof the global energy scene. This turmoilbrings many challenges that must be met.However, I shall sum them up in one question;how shall we create reliable interdependencebetween the energy actors in orderto be prepared for the energy challenges oftomorrow?To answer that, I will turn in part to the EnergyCharter Treaty. The Energy Charterpolitical declaration was signed in December1991; between what is now the EU and whatwas then the USSR. However the Charternow involves more than 50 states includingKazakhstan and other CIS countries, theEU, Japan, Turkey, Australia and others.The Energy Charter Treaty was developedon the basis of the 1991 Energy Charter.Whereas the latter document was drawnup as a declaration of political intent to promoteenergy cooperation, the Energy Char-26 № 5 (49), 2011

kazenergy forumtential to become a Nabucco “killer” by makingthe EU flagship project irrelevant. SouthStream has a greater capacity than Nabucco,has similar target dates for completionand would largely reach the same CentralEuropean clients.For Europe, building too many pipelineswould make little sense. Although theywould potentially introduce competition betweendifferent suppliers, the high constructioncosts would also likely inflate prices forconsumers. On the business side, returnswould be too small to justify several projects,meaning some may have to be abandoned.There are also important political dimensionsto consider. Rather than being cost effective,some of the projects can be viewedas political. Such projects do not necessarilymake business sense. Some have the avoidanceof transit as their rationale. Nabuccois recognised as being of “European interest”.However, other projects which do notenjoy the same status, like South Stream,have received backing from some EU MemberStates; Bulgaria, Romania, Hungaryand Greece. If both were to be launched it isunclear what the position of those countrieswould be.All the planned projects that I have referredto, including those of the Southern Corridorand South Stream, incorporate sectionsof existing pipelines. When all the projectsare put on the same map, a clear overlap betweenseveral projects becomes visible.The need for massive investment to meetfuture energy demand is well documentedand set to remain for the decades to come.Cancellation or even postponement wouldendanger the security of supply and in consequencethe economy as a whole. Energyinvestments are among the most complexand capital-intensive in the world. Theytherefore require a high level of protectionagainst political risk.But therein lies the difficulty. Companiessuch as Gazprom, before investing colossalamounts in new production fields, must becertain that gas will be purchased. This issecurity of demand. This is a very pertinentquestion in 2011, and a very difficult one toresolve. Prior to the current economic difficultiessecurity of demand was taken forgranted particularly from large consumermarkets such as the European Union.The economic crisis has had a significantimpact on energy. The slowdown of industryhas reduced energy demand in all sectors:construction, the car industry, services etc.In this context it is noteworthy that for thefirst time since the Second World War, electricityconsumption (and therefore demand)has fallen. The economic crisis has thereforedemonstrated that security of demandis also capable of fluctuation depending oncircumstances.The financial crisis, a corollary of the economiccrisis, has also had its effects. Investorshave become more cautious, credit istight and major projects are being reconsideredin the light of these new circumstances.To complicate matters even further, we haveseen the spectacular price crash, with a significanteffect on corporate cash flow.The emergence of shale gas on the US marketis perhaps an even more significantphenomenon. The lack of suitable technologyhad previously prevented exploitationof this gas whose existence has been knownfor some time. Now thanks to a technologicalbreakthrough shale gas is being produced inthe US, thus making the North Americanmarket self sufficient. Remarkably as a consequence,LNG imports, which were developedby large LNG producers, are now excludedfrom the very market for which theywere intended.Today, large quantities of LNG, previouslydestined for the US market, are now availableon the world market. There is thereforea surplus of gas, at least on the Europeanmarket, thanks to this shale gas factor andcombined with the fall in demand.Therefore at this point in time, there is anew, though perhaps not dramatically differentsituation. It requires all players to reviewtheir positions and most likely to considernew policy directions.This is an almost permanent and regular exercisefor the EU. EU energy external policyis dominated by bilateralism; the EU doesnot yet speak with one voice on this issue.However significant efforts in this directionare now being undertaken.For its part, Russia is faced with the usualchallenges of a supplier; what investmentsto make, whether and to what extent to developand LNG industry, which new marketsit could develop, etc.More generally, the events of the last twoto three years prove once again that historyconstantly changes and that nothing is28 № 5 (49), 2011

kazenergy forumWorld mass-media'spoint of viewLeading mass media from all over the worldgathered at one of the biggest events of theglobal energy industry - the VI KAZENERGYEurasian Forum. Authoritative experts and VIPspeakers discussed such topics as energy scenariosand forecast resources of hydrocarbonraw materials, strategic priorities for oil industrydevelopment, development of renewable energysources. The Forum work was highlighted by thelargest international editions and TV channels.We offer you the overview of key world Medias.The international edition of «The New YorkTimes» - «International Herald Tribune»newspaper published volumetric articleentitled «Kazakhstan on the world stage:the KAZENERGY Eurasian Forum». JournalistCharles van der Leeuw, calling Kazakhstana key supplier of oil, gas, coal and uranium,specifies that the country takes the secondplace among the CIS countries on attractionof investments, after Russia and ahead ofBelarus and Azerbaijan. As evidence theauthor gives statistics, which implies that thecapital investments over the first half of 2011reached $ 13 billion, and in 2010, Kazakhstan'seconomy was estimated at 21.8 trillion tengeor about $ 150 billion.The author tried to analyze the reservesof mineral resources and routes oftransportation of hydrocarbons. «At theKAZENERGY Eurasian Forum, held Oct. 4 and5 in Kazakhstan’s capital, Astana, KairgeldyKabyldin, the chairman of Kazakhstan’s stateoil and gas company, KazMunaiGas, presentedthe achievements of the country’s oil and gassector in the past two decades. Accordingto Kabyldin, in 20 years of independenceoil export volumes have increased from 13million to 71 million tons per annum, 4 000kilometers of pipelines were built. By 2014,oil production is expected to reach 85 milliontons, and oil exports 75 million tons» - hewrites. The correspondent of the newspaperalso recalled that Kazakhstan is sitting on 15percent of known world reserves of uraniumand 4 percent of coal. The author analyzes thewelcome speech of the Prime Minister KarimMassimov, in which the head of governmentsaid that Kazakhstan and all other stateseven now must think about the post-oil era."Kazakhstan is preparing for 10 to 20 yearsfrom now, when its oil production will reach itspeak, and beyond. That was the main messageof Karim Massimov’s speech ", - writes Charlesvan der Leeuw.In his opinion, the VI KAZENERGY EurasianForum delegates acknowledged that no onetype of energy sources can independently meetthe needs of the population. «Participantsagreed that alternative sources of energyshould no longer be seen as competitors to oiland gas, but should be complimentary to themand contribute to energy security around theglobe" - sums up the journalist.The «Financial Times» newspaper publishedan article by editor of energy section SilviaPfeiffer, who moderated exclusive conferencedinnernamed "Kazakhstan on the energymap of Eurasia", and, respectively, had theopportunity to talk with Kazakhstani as well asforeign experts.«Twenty years after gaining independencefrom the Soviet Union – the anniversary fallson December 16 – Kazakhstan is today centralAsia’s most successful economy. The world’sinternational oil majors, from Chevron andBG group to Eni, have gathered in the country,intrigued by the promise of its mineral wealth.The International Energy Agency estimates itsproven oil reserves at 40bn barrels. Foreigndirect investment totals more than $100bn»,- the author tells. She recalls 2008, whenbetween a consortium of foreign companiesand the government it was resolved a disputeover Kashagan field, and draws parallelswith the present situation regarding theKarachaganak gas field. «The government isconsidering acquiring a 10 per cent stake forbetween $700m and $1.1bn ahead of a thirdphase of development of the project throughKazMunaiGas». The company is owned bySamruk-Kazyna, the country’s sovereign wealthfund. «We plan to resolve all of the outstandingissues in the near future (on Karachaganak)…All of those very big projects that require a lotof investment, we have no chance but to agreeon how to move forward. We are doomed toagree», - Mr. Kulibayev told the Financial Timesin an interview. But Karachaganak, he added,was «a successful project» that has alreadyattracted a lot of investment» - written in thearticle. The author also gives the views of expertsof PFC Energy, which said: "Karachaganak is theonly big foreign oil development in Kazakhstanwithout state participation. It was obvious thatKazMunaiGas would at some point come in».30 № 5 (49), 2011

actualKazakhstaniFormulaof SuccessTwenty years ago in the result of thecollapse of the Soviet Union, a newcountry –Kazakhstan appeared onthe world political map.32 № 5 (49), 2011he current year of 2011 isthe anniversary for the Republic,main national holiday,the Independence Day,is celebrated on December16. In 1991 the ConstitutionalLaw “On the Independentstatehood of the Republicof Kazakhstan” gaveTby Energy a legislative foundation toFocus young state. From that remarkabledate the modernhistory of Kazakhstan has began.Among the crowning achievements of Kazakhstanare the stability, harmony andpeace in the community joining over 120 nationalities.

The statehood establishment was precededby rocky years of hard and strenuous workon the formation of a new economical, politicaland social system, establishment of institutestaking into account the world’s advancedeconomies experience and nationalpeculiarities.The nation achieved ambitious aims. Thebases of the national independence havebeen confirmed by the territorial integrityand inviolability of the boarders, the economytransitioned to a free market developmentand is actively integrating to the globalmarket.The principal outcome is the world-widerecognition of Kazakhstan, consolidation ofthe its authority on the regional and internationallevels.Economical Achievements. Kazakhstanhas become a possessor of impressive indicatorsin the economical sphere in a relativelyshort period.Development of the oil and gas sector is the“locomotive” of the Kazakhstani economy.Rapid development of production and exportof raw materials allowed Kazakhstan toovercome the global economical and financialcrisis and to ensure high economical growth.The revenues from the sale of raw resources,accumulated in the National Fund, servedas “safety cushions” for the economy duringthe hardest period and allowed the governmentperforming social obligations and implementingvarious programs.Today the national economy growth is keepingtrending up ensuring dynamic developmentof the market relations and a consequentintegration into the world economicrelationships. Privatization has been conducted,effective tax, bank, pension systemswere created, as well as entrepreneurshipwas formed and is actively supported. Besides,in the years of independence a greatwork has been done on the improvement ofthe legislative system that meet the requirementsof the state with the market economy.Thanks to the energy sector serving as thelaunching platform for the national economicalgrowth, the state focuses on the developmentof own high technology production industries,reduction of import of consumablecommodities, agricultural products and foodindustry. The course is taken to the forcedindustrial and innovative development, industrialdiversification in those industriesthat are able to export products and createthe added value. The new industrial policy isaimed at these objectives, to provide for theintegrated development of the industrial,agricultural and scientific technological sectors.Social development is also positively characterizedat the current stage. The policy ofthe improving the nation welfare is being activelyimplemented. In January 1, 2011 theGDP amounted 9 thousand US dollars perKAZENERGY33

actualKazakhstanstandscommittedto the integrationprocess, as a fullmember of manyinternationaland interregionalorganizationscapita. In comparison with the GDP in 1994,it is 12 times higher.According to the classification of the WorldBank, Kazakhstan is in the group of the nationswith the average income. In the lastdecade, financial revenues of the Kazakhstanisincreased fivefold, the average salaryincreased sixfold, the minimal salaryincreased 25 times. Such essential achievementsmake the citizens be optimistic abouttheir future.Owing to high rates of economic well-being,Kazakhstan is one of the leaders in the CIS.The Republic was one of the first in the post-Soviet space recognized by the EuropeanUnion and the United States as a countrywith market economy. In addition, Kazakhstan- the first CIS country acquired the investmentrating.Among former Soviet republics Kazakhstanis considered as the country with the mostfavorable business climate. It was appreciatedby foreign investors. Distinctive is thatthanks to its positive image Kazakhstan iskeeping a leading position in terms of attractingand implementing investment resourcesto develop its economy despite of thecurrent tough situation in global markets.In 2010, the Customs Union of Kazakhstan,Belarus and Russia began operating. Simultaneouslythe principal documents on creatingof the Common Economic Space of thethree states were adopted.The question of Kazakhstan's accession tothe World Trade Organization is under review,which directly and indirectly provesthat the country is steadily integrating intothe global economy and adapting to a globalcompetition.Political Achievements. Kazakhstanstands committed to the integration process,as a full member of many international andinterregional organizations, actively pursuingthe policy of integration and enteringinto bilateral and multilateral partnershipswith many countries worldwide.Through its initiatives it is gradually developingthe political, military, economic andtrade cooperation with neighbouring andbordering states. The tools of this partnershipare the OSCE, UN, EU, CICA, SCO,the Customs Union, the Eurasian EconomicCommunity, the Organization of CentralAsian Cooperation, the Common EconomicSpace, the Organization of Islamic Cooperation.Historical moment in the early independencewas the voluntary renunciation of theworld's fourth powerful nuclear weapons arsenal.Closure of the largest testing site inSemipalatinsk is a kind of the guarantee ofinternal security, and a worthy contributionto global security. In this way Kazakhstanclearly identified the underlying policy ofpeaceful coexistence, tolerance and openness.The fact that the country is at the forefrontof the international anti-nuclear movementhas been proven with the event heldin the capital in October 2011-the InternationalForum For the Nuclear-Free World,which was attended by prominent politi-34 № 5 (49), 2011

The Programmeof theDevelopmentStrategy ofKazakhstan until2030 – basisfor all reforms. Itdefines the maindirections andthe sequenceof tacticalobjectives.cians, scientists, including Director Generalof IAEA Yukiya Amano.The official Astana raises different initiatives,constructive proposals and mechanismson efficient cooperation and approachesto generally acceptable ideas on a regularbasis. One of such initiatives we would liketo refer is the establishment of the Conferenceon Interaction and Confidence-BuildingMeasures in Asia (CICA), which take aspecial place in the system of foreign policyof our state representing its trademark onthe world political arena. CICA legitimatelyclaims to be the most ambitious interstateproject on the continent. Thus, CICA playsthe role of a reliable tool for the constructionof external “safety fence” of Kazakhstan andfor continentalized security and cooperationin Asia.During the years of independence, the statehoodand democracy institutes were establishedto provide reliable protection of sovereigntyand independence. Reformation wasconducted within governance system to provideinteraction of the legislative, executiveand judiciary powers, and a new legislativeand legal base was formed to meet the moderninternational standards.Stable political situation, interethnic andinterconfessional consensus, rational andplanned construction of the state are the resultsof democratic reforms in the country.This means that it is possible to continuethe effective implementation of governmentreforms. In addition, such conferences asthe Congress of World and Traditional Religions,held in Astana, contribute to themaintenance of the peace in the world. Thevery Kazakh capital played a host the firstSummit of OSCE member-states over thelast decade. Kazakhstan's chairmanship inthe Organization for Security and Cooperationin Europe has brought new waves toactivities of the European structures and"revived" it.Thus, during 20 years of independence underthe leadership of the President NursultanNazarbayev, Kazakhstan has madeimpressive progress in economy, state formationand social sphere. The Programmeof the Development Strategy of Kazakhstanuntil 2030 – basis for all reforms. It definesthe main directions and the sequence of tacticalobjectives. The Head of Nation's policyenabled the implementation of complex reforms,sustaining stability and unity of themultiethnic and multireligious society. Todaythis policy is recognized worldwide asthe Kazakh model of modernization, as Kazakhstan'sdevelopment path.Due to effective domestic and foreign policiesof the President, the Republic of Kazakhstantakes a worthy place in the worldcommunity.KAZENERGY35

actualAstana:Symbol of KazakhstanAstana, being adynamically developingcapital is a unifying ideafor citizens of the countrythat bursts the progress ofKazakhstan.36 № 5 (49), 2011

azakhstani capital Astana(from Kazakh«capital city») is youngerthan Kazakh state.In spite of it the popularityof modern city increasingday to day. Thehistory of new administrativecentre of theKby EnergyRepublic begins fromFocus1997 three years afterthe country’s leaderNursultan Nazarbayev proposed to movegovernmental hub from Almaty, situatedon foothills of the Tian Shan mountainrange in the South.The time has shown that PresidentNursultan Nazarbayev had taken a wisedecision that contributed a lot to the furtherprosperity of independent Kazakhstan.Undoubtedly, Head of the Nation isa key driver for transformation of Astanainto dynamically developed Megapolis.Once, President of Russia Dmitriy Medvedevsaid that Nazarbayev «has giventhis city not only his work but also hissoul»...Within less than 15-years period Astanahas been changed hugely, from thenprovincialtown to «the capital from zero»– modern political and economical nodeof Kazakhstan that blends Western architectureand features of the true East.As it is commonly recognized, Astana becamethe Central Asia's pre-eminent city.Today, the young capital is growing rapidlyas the key administrative and a majorbusiness centre of Kazakhstan. Itspopulation has tripled since the move,to over 700 thousand and is estimated totop one million in close future.Astana has experienced a constructionboom on a grand scale, and constructioncontinues apace. It is interesting thatcurrently only 20-30% of the Astana’sconstruction plan, over a total city areaof 274 square miles is developed – manymajor projects are due to be finished by2012-20.Prominent architects such as Lord Foster,Kisho Kurokawa and other elaboratedthe new vision of city, interweaving ofmegapolis and nature that helped to createa marvel and unique image of Astanadistinguishing it from all other capitalsworldwide.KAZENERGY37

actual«AstanaNew City»– specialeconomic zonewith the Industrialpark has beenestablishedthat proposea whole rangeof incentivesfor businessdevelopment.It attractedmore than 250companiesthat totallyinvested $10billion, including$4 billionof foreigninvestments.38 № 5 (49), 2011The city inspires wonder and is able tocharm everybody at first glance. Astana isrepresented by grandiose, glistening newbuildings that dominate the skyline formiles around. Some of them are real masterpiecesof art, for instance, 62-metre-highsilver pyramid named as Palace of Peaceand Reconciliation where Congress for Leadersof the World and Traditional Religionsis regularly held, Khan Shatyr megamall –the highest tent on Earth, and the splendidPresidential Palace.It is also a magnet for investments consolidatingits positions as leading business andinfrastructure center of Kazakhstan. By theway, the share of Astana in Kazakhstan’sGDP ($150 billion) increased from 1.5% toalmost 10%, and industrial output grewmore that sevenfold in just a decade.It is important that the Special economiczone - «Astana New City» with the Industrialpark has been established that propose awhole range of incentives for business development.It attracted more than 250 companiesthat totally invested $10 billion, including$4 billion of foreign investments. Suchworld-known companies, as General Electric,Alstom, Talgo and other, have productionassets there. Within the following fiveyears the city will implement 11 large-scaledinvestment projects worth $5 billion.Moreover, Astana becomes step-by-step aleading innovation hub of Kazakhstan, thatwill burst the industrial and innovative developmentof the Republic as a whole – thelong-term strategic objective for the nation.To fully use the innovative opportunities ofthe capital, «Astana Innovations» JSC hasbeen established that will coordinate effortsin that direction. But a real breakthrough isa creation of Nazarbayev University, openedas a result of the personal initiative of thePresident of Kazakhstan. It is the leadingresearch, educational and innovative centerof the country, positioned to become thenational brand, and it has real ambitions tobe among top universities of the world in aclose future.Astana strengthens its influence in internationalactivity and is well known as a hostplace for important international events, includingmajor congresses and forums.For instance, Congress for Leaders of theWorld and Traditional Religions, SCO summitsand others regularly take place there.Exactly in Kazakhstani capital, OSCE Summitunder Kazakhstan’s Chairmanship wassuccessfully held – one of the most importantinternational meetings devoted to thematters of strengthening mutual cooperation,trust and global security.The event - really historic. Representativesof 56 nations have visited Kazakh land inorder to participate in OSCE discussions. Asit generally known there were no any Organization’sconferences over last decade. Kazakhstan’sChairmanship contributed a newbreath to existence and policy of the OSCE.

Its role in preventing of wars and resolvingof conflicts, supporting of the global securitywas restored.Now Astana is bidding to host the Expo-2017international exhibition. This Expo shouldbe seen as an ideal opportunity to foster economicdialogue with the entire internationalcommunity concerning sustainable developmentand business cooperation.Moreover Astana has made a tremendousbreakthrough as an international sport center,having created a modern and high-techinfrastructure for football, ice hockey, cyclingand other sports… It was a main venuefor 7th Asian Winter Games that took placein Kazakhstan in the beginning of 2011, thename of the Megapolis is also a symbol of«Astana» cycling team that achieved a lot ofachievements in international pro-competitionssuch as Tour de France, Giro d’Italia,etc.Without doubts, the future is bright for Astana,and it will continue to develop further,being a real evidence of success of independentKazakhstan.KAZENERGY39

actualA high growth potential of hydrocarbon reservesstill remains. This is, primarily, dueto the fact that at present in some depositsthere are held exploratory investigations,works on forecasting and identifying newprospective oil and gas fields, on accelerationof their exploration, development and puttinginto operation, in particular, in subsurfaceof Caspian and Aral seas. The growth ofresource potential is associated with regionalseismic operations held in the Northern,Central and Southern Kazakhstan.Oil and gas industry of Kazakhstan is stillin the zone of active growth, along with thepreservation of its high investment attractiveness.One of the favorable factors for thisis the positive dynamics of development ofa global oil and gas market, stipulating expandedopportunities for products sales inexternal markets and the availability of excessfinancial liquidity affordable for investmentto exploration and productionKazakhstan is the second largest state afterRussia on oil production among CIS countries.Overall production in 2010 totaled 79.7million tons, or 104.2% in relation to 2009, ofwhich 71.2 million tons were sold for export.It should be noted that for 20 years of independentdevelopment the oil production inthe country increased more than threefold.The government expects to increase totalproduction to 95 million tons up to 2015. Accordingto the "World Energy Outlook 2010"of International Energy Agency, in 2020Kazakhstan will join the world's ten largestexporters of oil and gas - it is planned to produce132 million tons of oil in the country,including the beginning of active exploitationof the Caspian offshore fields.Kazakhstan places great prospects for theexpansion of production capacity of a numberof already existing fields, first of all Tengiz(from 25.9 to 36 million tons per year by2016), and the commissioning of the Kashaganfield (start of production according tothe plan – in the end of 2012).It is worth noting that foreign oil and gascompanies from the EU, U.S., Russia, Chinaand other countries are actively representedin the field of oil exploration and production,mainly due to the favorable investment climateof Kazakhstan and openness of the industryfor foreign participation. In fact, thevery participation of foreign oil companieshas allowed Kazakhstan to rapidly introduceinto commercial operation such majorprojects as Tengiz, Karachaganak and others.Until today foreign investors determinethe dynamics of oil and gas sector of thecountry.For example, 60% of 107 billion dollars of investmentsto domestic oil and gas sector forthe last 10 years fell on projects with foreigncompanies. These projects have provided aproduction of about 56 million tons out of79.7 million tons of oil and condensate producedin the country last year.However, Kazakhstan has a priority in theexpansion of state participation in oil andgas projects, strengthening the responsibilitiesof foreign investors in the social sectorand local content. The new conditions requirefrom foreign investors a clearer formulationof the investment strategy that takesinto account the interests of Kazakhstan asoil producing state and its long-term developmentgoals.The dynamics ofoil productionin Kazakhstan(million tons).Sources: Ministryof Oil and Gasof the Republicof Kazakhstan,Statistics Agencyof Kazakhstan.over 50% of oilreserves areconcentrated in 3largest fields: Tengiz,Kashagan, andKarachaganak.42 № 5 (49), 2011

actualGas Industryof Kazakhstan.The growth issustainedGas sector of oil and gas complexof Kazakhstan representsone of the principal componentsof the national economy.44 № 5 (49), 2011

NAnalyticalService,Agency forResearchon Return onInvestmentsatural gas has become themore promising energy-carrierfor Kazakhstan; the exploredand valued reservesof natural gas (with the accountof newly discovereddeposits on the Caspianshelf) make up to 3.9 trillioncubic meters, and its potentialresources reach 6-8 trillioncubic meters.The peculiarity of the gasreserves discovered is thatnatural gas is producedalong with crude oil andcondensate on all deposits almost and, especially,on the newly developed large deposits.Therefore, active development of thesedeposits and sharp increase in oil productionin the recent years require utilizationof the growing volumes of the associated gasproduced.The approximate allocation of total gas reservesof 3.9 trillion cubic meters is as follows:34.5% are the Kashagan associatedgas, 23.2% are Karachaganak gas and 17.3%are Tengiz gas, the remaining part is sharedbetween smaller deposits. According to BPStatistical Review, Kazakhstan possessessignificant gas resources with proven reservesof 1.82 trillion cubic meters, whichare close to Iraq and Uzbekistan indications.Reserves and production ratios are high aswell, which are 69.8 years.The newly discovered gas deposits are currentlyrelated to new oil deposits in theCaspian Sea shelf. In addition to the shelf,there are perspective areas in the Aral Sea.Thus, the real situation on the gas reservesis unclear so far, and may require 10 to 20years to be clarified, considering technologicaldevelopment of exploration, utilization,processing, extraction increase and productionof new gas types.Production of Natural Gas. Among primaryenergy-carrying resources, the consumptionof natural gas in Kazakhstan takes 12%only. The current natural gas production islow. According to the forecasts of the Ministryof Oil and Gas of RK, in 2010 gas productionreached 37.4 billion cubic meters.Taking into account the national gas reservesand significant economical and ecologicaleffect of this fuel consumption, suchsituation cannot be considered as acceptable.Therefore Kazakhstan purposes to accordspecial priority to the national gas industrydevelopment.However, the main part of the gas reservesdeveloped is concentrated in oil and gascondensate deposits, which constraints thegas resources deployment. Gas is producedsimultaneously with crude and condensate.About twenty deposits contain non-associatedgas. This is why up to recent time gasproduction was a part of the oil producingcompanies’ activity.Another limiting factor is the complexity ofthe gas resources extraction.Almost all forecasted resources locate in thesubsalt layers of the Pre-Caspian Lowlandand are characterized with the complexity ofthe extraction due to deep water, multiplecomponents and high concentration of sulfuriccompounds. At the same time, depositswith shallow depth and free of sulfuriccompounds have moderate gas reserves withhigh local importance to gasify restricted areas.Herewith, the long-term Development Strategyuntil 2030, the Development Concept ofthe Gas Industry of the Republic of Kazakhstanuntil 2015 provide for quality changesin a slant on the questions regarding theconsumption of the national gas resourcesavailable.After the issues solved on the associated gasutilization as a limiting factor of the crudeproduction growth, the sector of gas production,processing and marketing shall becomethe primary industry of the national economydevelopment.In the future, Kazakhstan expects to jointhe states with the world’s largest provennatural gas reserves and to become one ofthe three main producers and exporters ofnatural and liquefied gas on the territory ofCIS. By 2015, gas production is planned toreach 59.3 billion cubic meters against 7.8billion cubic meters produced in 1991.Meanwhile, production of commodity gaswill increase from 21.3 billion cubic metersproduced in 2010 to 25.3 billion cubic metersin 2011 and to 30.7 billion cubic meters in2015. Production of liquefied gas is plannedto increase from 2 million 245 thousand in2010 up to 2 million 360 thousand in 2015.KAZENERGY45

actualBy 2015, gasproduction isplanned to reach59.3 billion cubicmeters against7.8 billion cubicmeters producedin 1991.In the view of the gas production increase,its flaring reduces. For example, in 2006gas production volume was recorded at thelevel of 27 billion cubic meters, while flaringwas at the level of 3.1 billion cubic meters;in 2008 gas production reached 33.5 billioncubic meters, while 1.8 billion cubic meterswere flared; in 2010 37.4 billion cubic meterswere produced and 1.4 billion cubic meterswere flared.Gas Processing. Since a bigger part of thegas produced is the associated gas, it requiresprocessing on the gas processingplants (GPP) to obtain commodity gas andfurther deliver it to consumers and enterprises.The largest gas processing plants inKazakhstan are the Kazakh, Tengiz, Karachaganakand Zhanazhol.Kazakh gas processing plant, located inMangistau region, was constructed to utilizethe associated gas from Mangyshlak depositsand to supply the Aktau plastics plantwith the raw material.Gas processing capacities at Tengiz were increasedafter implementation of the SecondGeneration Project. It is proposed that afterthe plant reaches its full production capacity,about a third part of sour gas will beinjected back to the header, and the remainingpart will be used to produce commoditygas, propane, butane and sulfur. In terms oforiginality and innovation, the constructionproject on the expensive gas and chemicalcomplex in Atyrau region seems to be interesting.Despite of some delays in its implementation,the government promotes signingof a long-term agreement (13-15 years)for Tengiz gas supply to this complex.Zhanazhol oil and gas refinery, consistingof three GPP, was built by JSC CNPC-Aktobemunaygas under the gas utilizationprogram implementation. Current capacityof the first Zhanazhol GPP constructed in1984 and reconstructed in 2000-2003 composes800M cubic meters per year. Capacityof the second GPP put into operation in 2003is 1.4B cubic meters, and capacity of the firststage of the third GPP started in December2007 is 2 billion cubic meters. With this, inthe frame of the GPP 2nd and 3rd stages underprogress, the volume will compose 5 billioncubic meters per year.Karachaganak project is being developed byKarachaganak Petroleum Operating. Withthe view of further development of the Karachaganakdeposit, the issue is under discussionon the capacities expansion of OrenburgGPP where KPO supplies its gas for processing.After the operational capacities are expanded,Orenburg GPP will be supplied upto 16 billion cubic meters of raw gas for processingannually during 15 year.Also, in the near future the commissioningof GPP is planned in Karabatan village,Atyrau region to process the hydrocarbonsproduced in Kashagan to commodity condition.Transit and export capacities. The dynamicgrowth of gas production is impossiblewithout a developed pipeline infrastructure.The basis of the gas transmission industriesof the country is a transit main gas pipelinesacross eight regions of Kazakhstan, with thetotal length of more than 10 thousand km.The main transit lines are Central Asia –Center, Bukhara – Ural, Orenburg – Novo-46 № 5 (49), 2011

pskov, used to transit Turkmen and Uzbekgas.Kazakhstan has been actively developingpipeline transportation and infrastructure.The most relevant for the gas transportationindustry in the republic is the projectof reconstruction and modernization of thepipelines, particularly main gas pipelineCentral Asia – Center (CAC), which servesthe export of Kazakh and Central Asian gasto Russia and Europe.Besides, in 2009 Kazakhstan – China transitpipeline was built with capacity of 30 billioncubic meters per year, which representsa part of the Turkmenistan – China mainpipeline. It has already transported 15.5 billioncubic meters of Turkmen gas.In December 2010, construction started ofthe biggest national internal gas line Beyneu– Shymkent with the carrying capacity of upto 15 billion cubic meters, which though its26 branches will provide gas supply to thesouth regions with the lack of gas.Today, the bigger part of Kazakh gas exportedare produced in Karachaganak (over6 billion cubic meters in 2010), as well asin Tengiz (4.94 billion cubic meters accordingly).Kazakh gas is supplied to Russia only. However,after putting into operation of theBeyneu – Shymkent gas line in 2013, therewill be another independent direction for externalsupplies, China may be supplied with5 to 10 billion cubic meters of Kazakh gas.After the expected expansion of the carryingcapacity of the Turkmenistan – Kazakhstan– China from 30 to 55 billion cubic metersper annum, Kazakhstan will expand its capacitiesas a transit state.in 2009Kazakhstan –China transitpipeline was builtwith capacity of30 billion cubicmeters per year,which representsa part of theTurkmenistan– China mainpipeline.Gas productionin Kazakhstan,forecasted(billion cubicmeters) 0.Source: Ministryof Oil and Gasof RKKAZENERGY47

actualOil Export of Kazakhstan:In the years to come, Kazakhstan plansto sharply increase oil export to consolidateits contribution into the global energysecurity.Kazakhstan is one of the world’s principalhydrocarbon exportersUnlike other well-established oil productioncenters, like Norway, Russia,Mexico, Great Britain, a numberof the Gulf States, - Kazakhstan will reachthe peak oil and gas condensate in the nextdecade. It means Kazakhstan is the onlynon-OPEC state with a great potential to increaseoil production with an eye to the longtermoutlook.Thanks to the expanded production of hydrocarbonsand the implemented policy onthe export diversification, within 2000s Kazakhstanmanaged to sharply increase thescope of oil and gas condensate supplies toexternal markets.Thus, in 2001 oil and gas condensate exportscomposed 32.38MT; in the last year theyreached 71.2MT, which is more than twofolds. With this, production increased from40.1MT to 79.7MT, which proves a keepingforward expansion of hydrocarbons exportagainst production.In the current year, export of oil and gas condensatemay stand at 72MT with the productionrate of 81-81.5MT. The dynamics of thefirst half of 2011 affirms these expectations:January-June oil export scopes increased by13.1% compared to the corresponding periodof the last year.Kazakhstan has a number of trade partnerson oil and gas condensate supplies, whichcomes under notice.In particular, last year Kazakhstan suppliedoil to 33 world states, the largest amongthem were Italy (15.94MT), China (9.73MT),France (7.32MT) and Netherlands (6.99MT).This shows that independent Kazakhstansucceeded in the diversification of oil suppliesconsidering a leading role of the Europeanconsumers in the total scope of theexported oil.Hydrocarbons export: planned growthTheperspectives for the export growth ofthe Kazakhstani hydrocarbons seem tobe stable.Notably, in compliance with the strategicplan of the Ministry of Oil and Gas of RKfor 2011-2015, the scope of oil export in 2015will reach up to 84MT, which is 13MT higherthan the last year level. The calculationsof the Ministry of Oil and Gas of RK alsospeak for the growth of the oil export scopes48 № 5 (49), 2011

new opportunities for growthup to 110MT as a minimum in 2020 with theproduction rate of 132.1MT, out of which33.7MT belong to JSC NC KazMunayGas.The forecasts reviewed have sufficientgrounds, including a number of oil productionprojects to be introduced and oil expansionthru the implemented projects, whichwill bring state oil export potential to a significantincrease.First of all, it mentions the developmentof the world’s largest oil and gas deposit,Kashagan, located on the north-east Caspianshelf. Production of the deposit is plannedfor the next year end: only in 2015 the hydrocarbonsproduction will reach 14.9MTand 65.23MT in 2020.Expectations are prominent in regard to theTengiz capacity expansion project, valued at15-20B dollars, which will allow for the oilproduction increase from 25.9MT to 36MTby 2016.Also, by 2020 the state export potential willbe added with the production commenced ina row of the Caspian shelf deposits.Particularly, by 2020, the annual productionof 987KT of oil is planned from Khazar,675KT – from Kalamkas Sea, 416KT – fromAuezov, 816KT – from Rakushechnoye sea,The main extraction ofnatural gas is conductedin Aktobe, Atyrau, WestKazakhstan, Kyzylorda andMangistau regions.Oil and gas condensate export: principal importerstates in 2010 (MT).Sources: the Ministry of Oil and Gas of RK, KAZENERGYAssociation, and Kazakhstan oil companiesKAZENERGY49

actualDynamics of oil and gas condensate export in Kazakhstan (MT).Sources: the Ministry of Oil and Gas of RK, KAZENERGY AssociationForecasted dynamics of oil production/export inKazakhstan (MT).Source: the Ministry of Oil and Gas of RKKazakhstanis planning toincrease oil exportvia Aktau portto the CaspianSea up to 12MTagainst 9MT of thecurrent year453KT – from N block. It is worth to note,that a bigger part of this oil will be exportedto Europe, first of all.Export Capacity ExpansionInthis context, it is notable that Kazakhstanhas taken the course to expand theexport capacities purposed at the compliancewith the growth dynamics of suppliesfrom the Kazakhstani deposits to the externalmarkets. As of today, the oil transportsystem of Kazakhstan complies with thetransportation requirements both in termsof the carrying capacity and export directions.The oil companies operating in the Republichave all hydrocarbon export directions attheir availability.The first among them are the oil pipelinesgoing via Russia: the Caspian Pipeline Consortium(CPC) and Atyrau-Samara; thesecond are the transcaspian overseas transportationvia Aktau port and further exportvia Baku-Tbilisi-Ceyhan oil pipeline; thethird is transportation to China via Atasu-Alashankou oil pipeline, which was commissionedin 2005.Total export capacity of the existing exportpipelines makes up to approximately 58MTper annum, and the biggest among them isCPC built in 2001 that carried 28.4MT ofKazakh oil in 2010.Bearing in mind a zero tolerance to the deficitof export capacities, which are quite realaccording production increase forecasts,Kazakhstan commenced the implementationof the projects to provide a significantincrease of the carrying capacity of the existingoil transportation systems in the nextfew years.First of all, commencement of the constructionand installation works in the currentJuly purposed at CPC expansion, where Kazakhstanrepresents one of the main shareholders(20.75%).Despite of delays related to the lengthy coordinationof the project terms betweenKazakhstan and Russia, the implementationof the CPC expansion project with thevalue of $5.4B will promote the increase ofthe total pipeline capacity up to 67MT by thefirst quarter 2015; herewith the Kazakhstanshare will grow to 52.2MT per annum.The scope of Kazakh oil export via Atyrau-Samara in the European direction is supposedto be kept at 15MT until 2020.Kazakhstan intends to activate the export ofoil raw to China, where demands for hydrocarbonsare rapidly growing.In 2011 only, the carrying capacity of Atasu-Alashankou pipeline supplying Kazakh oilto China increased from 10MT to 12MT. Inaddition, the two states signed the agreementson the pipeline expansion to 20MT,which despite of all is less than the Europeandirection. However, the Chinese exportdirection will remain as one of the principaldirections for Kazakhstan during the nextdecade.Besides, Kazakhstan is planning to increaseoil export via Aktau port to the Caspian Seaup to 12MT against 9MT of the current year,and rail road export – up to 11MT against7.4MT accordingly.50 № 5 (49), 2011

actualLandof OpportunitiesKazakhstan attracts energy investmentsThe current turbulence in financial markets makes international investors lookfor the places, where a decent profit is not undermined by political risks andcommercial drops. One of such places is giant Kazakhstan, lying between theindustrialized West and the rapidly developing East. Its mineral wealth and ambitioustechnological development has created huge demand for investment toprofit from a combination of these two foundations of economic growth.by Igor Ivakhnenko52 № 4 (48) 2011

On the Rise. Looking globally, we can see that it isalready 20 years that this state has been on a stableoil rise, increased its share in the global energy tradedue to significant growth of production and the establishmentof a branched export pipeline system.Now the country is at the cusp of entering into thetop ten oil producers, by 2020 it is going to be amongthem; and in a long term perspective it will be oneof the “great seven” states with the “black gold” reservesup to the end of the current century.At the same time, Astana is planning to make 25times increase in the current production of polymersin the mid-term, and threefold increase in the productionof own oil and gas products by the end ofthe decade. Such growth indicators are a part of theIndustrial and innovative development strategy ofKazakhstan accepted in 2010 (at the end of the firstglobal crisis wave), with one of the long term purposesthe affiliation with the 50 most competitive worldeconomies, due to rapid industrial growth composing7% annually.To achieve the set goals, Kazakhstan oil industryneeds foreign investments inflow approximatelyequal to that obtained during the previous 20 years ofindependence, which is about $120 billion. However,it is more obvious that the capital sources structurewill significantly change. Before, west companieswere recognized as the main investment partners ofKazakhstan, now Astana is actively diversifying theflow of foreign investments through eastern companies.Eastern Wave. Asian investors are actively participatingin the Kazakhstan oil market. For example,the Indian ONGC Videsh Limited (OVL) acquired25% share in Satpayev project from the nationalKazMunayGas (KMG) for $80 million. The forecastedextracted resources of this site make up 253 milliontons of crude oil equivalent (o.e.), which representsan average scope for Kazakhstani sector of the CaspianSea (KSCS).Another group of the Indian companies, including theearlier mentioned OVL, as well as Gail and IndianOil Corporation (IOC), may enter the North Caspianproject for $6 billion. This project provides for the developmentof a unique in terms of the reserves of theKAZENERGY53

actualoil and gas condensate deposit, Kashagan.Its reserves are valued at 4.8 billion tons ofoil equivalent (o.e.).American Indian negotiations are not completedyet, but if this business project goesbeyond the scope, then the tendency of oilindustry investments building up by newparticipants will be more obvious. Out ofall agreements, on the Kazakhstan CaspianShelf development in particularly, thetwo thirds belong to the Eastern and SouthAsian investors.New Resources Attraction. New investorsare attracted to the Kazakhstani marketby both global processes, like reduction ofresource base on the traditional world oilproducing areas, and recent positive newson real business situation regarding the developmentof KSCS.It is noteworthy that they are provided byprojects with the participation of investorsfrom the Gulf countries. Caspi Meruerty OperatingCompany BV Consortium operatingon Zhemchuzhina block in the north-easternCaspian, over the past few years drilled anumber of exploration wells, each of whichwas successful. In this project, 55% belong tothe Anglo-Dutch Shell, 25% to KMG and therest belong to Oman Pearls Co. Ltd.Another company of the Arabian East,Mubadala from AUE, jointly with the AmericanConocoPhillips (each has 24,5%) andKMG (51%), succeed in exploration of Nblock. The first exploration well was built inthe year beginning, where crude was foundand the drilling is going to be continued.Implementation of the opportunities underthe mentioned projects will provide for thecrude production in Kazakhstan up to 130million tons by 2020 from 80 million tons in2010. in a longer term the increase in crudeproduction will be provided by other offshoreprojects growing in number.Implementationof theopportunitiesunder thementionedprojects willprovide for thecrude productionin Kazakhstanup to 130 milliontons by 2020from 80 milliontons in 2010.The foreign companies’ contribution intooff-shore projects is growing as well, includingthe fact that shelf’s crude potentialis increasing during a long period. Inthe early 90-s KSCS resources were valuedat less than 3 billion tons of oil equivalent.Today they have reached 8 billion tons andkeep tends to grow. The dynamics of the exploredhydrocarbon reserves represents thegroundbreaking confirmation of the potential.At the end of XX century they equaledzero, but now they exceed 5 billion tons ofo.e. Besides, progress in the projects withthe participation of Oman Pearls Co. andMubadala shows a high probability that theexplored reserves will grow.Meanwhile, though the operational activityon the Kazakhstan Caspian Shelf is continuouslyincreasing the scope, the biggest partof potential structures in KSCS remainsfree. 75% out of 120 oil and gas carryingsites found potential remain unallocated. Atthe same time expanding the geological researchis opening new promising structuresthat can be hydrocarbon deposits. That is,the resource of the Caspian shelf of Kazakhstan'sattractiveness to investors increasesfrom year to year.This raw material potential receives activeinfrastructure support for the monetizationof energy products. This decade expandingbegan in the export routes to the West, includingthe North-Caspian pipeline from 28million tons to 67 million and the establishmentof the Kazakhstan Caspian TransportationSystem up to 56 million, as well as theEast: Atasu - Alashankou from 10 million to20 and a gas pipeline Beyneu - Akbulak to10-15 billion cubic meters a year.The result of these efforts will create astrong well-balanced system of supply ofKazakh hydrocarbons to the world market.That is the preparing of the infrastructurefor the export of additional quantities of oiland gas from current and new projects, andpreventing of transportation risks is solvedwith anticipation.Deep Processing Revenue. At the sametime, growth in oil and gas reserves and productionin Kazakhstan, forming a certainsurplus of raw materials in excess of the exporttrade opens up entirely new possibilitiesto generate revenue.The presence of an enormous resource baseallows creating the country's capacity fordeep processing of hydrocarbons. They willhave a significant competitive advantagecompared to similar industries in the coun-54 № 5 (49), 2011

tries industrialized, but located far from thesources of supply. In fact construction in Kazakhstanof petrochemical enterprises savesowners of such projects from the millionsand billions of constant costs for delivery ofraw materials to the processing site. In turn,savings in transport costs increases the returnon investment in Kazakhstani oil-gas.And the proximity of the republic to suchgrowing consumers of the products of deepprocessing as China, Russia, the EuropeanUnion provides additional benefits in thesale.It is not surprising that in May this yearThe Korean Company, LG Chem, and Kazakhpublic-private alliance KazakhstanPetrochemical Industries (KPI) signed thememorandum of cooperation in implementingthe second phase project of Atyrau GasChemical Complex (AGCC) in the form of ajoint venture. Korea will provide a loan of $3.01 billion to implement the second phaseof the complex to produce 800 thousandtons of polyethylene. Moreover, the Korean-Kazakh joint venture will invest in the projectadditional $ 1.29 billion equity. And thefirst phase AGKH for 450 thousand tons ofpropylene is already under construction byanother Asian company, Chinese SinopecEngineering. And to finance this project,Eximbank of China provided a loan of $ 1.3billion.Atyrau project for the production of polymersis one of the largest, but not the onlyone planned in Kazakhstan. In addition to anumber of petrochemical facilities for republicrefineries to be constructed in 2015-2017,there are some other plans. For example, aprivate Pavlodar petrochemical company islooking for partners for a project to increasethe production of polymers from 32 tons to 1million tons.The number of industrial projects, based ondeep processing of hydrocarbons is increasingin Kazakhstan, reflecting the globaltrend of long-term rise of the market of petrochemicalproducts. After all, if now theglobal petrochemical industry revenues areabout $ 1.8-2.2 billion per year, by mid-centurythey will grow to $15-20 trillion. Theincreased revenue will not only increase theproduction volumes of products but also aAtyrau project forthe production ofpolymers is oneof the largest,in Kazakhstan.In addition toa number ofpetrochemicalfacilitiesfor republicrefineries to beconstructed in2015-2017steady increase in value. It is obvious thata significant portion of that money will beearned by those market participants, whooptimally use the resource and logisticalspecific of regions when selecting the locationof new production capacity. Just like inKazakhstan...Tanks against balance. Even this brief profileof recent projects makes clear the natureof the new "Eastern" wave of investments inKazakhstan's oil and gas industry. Foreigncompanies are trying to secure a comprehensivepresence in the market. Most likely, becausethey consider the state an attractiveplace to build vertically integrated hydrocarbonbusiness from the crude to the processing.It is clear that a significant role in the country'sinvestment attractiveness plays its legaland tax climate. A typical example is asfollows, the companies from neighbouringRussia this year after the formation of theCommon Economic Space have been activelyre-registering and transferring their businessin the Central Asian Republic. Thesemarket participants imply more lenient taxregime and long-term stability of the politicalsituation in Kazakhstan, avoidant nationaland civil conflicts.Today, when a variety of national groups ofinvestors are directed to Kazakhstan, it isworth recalling that the businessmen fromthe Gulf were among the first foreigners whoafter independence of the Republic saw in itan attractive place for investment and profitfrom the projects in the energy industry. Forexample, investors of the Arab East providedthe birth of the North-Caspian pipeline inthe early 1990s.20 years later Kazakhstan opens up newopportunities for them. Highly profitable investmentsin exploration and refining of thestocks of its oil tanks is a good alternativeto bank safes, as cash holdings are the mostvulnerable part of the capital when the financialcrisis is shaking the global economy.KAZENERGY55

This year it is a century ago that the first oil operators from Western Europe engagedin Kazakhstan. In 1911, the Nobel family of Sweden, which was already active inAzerbaijan across the Caspian, also obtained a 42.5 percent stake in Emba-Kaspiisky.The same year, the Royal Dutch (now Royal Dutch Shell) made a bid for concessionson adjacent areas to the Russian government. Both companies started working on thefields over the winter. But the deals they struck to get there make 2011 the hundred-yearanniversary of partnerships with western oil companies for Kazakhstan.Facing bankruptcyThe series of shake-ups on the world oil marketsin the early XXth Century, includinga price war against Russian oil producerswaged by Standard's Rockefeller, the internalstrife for control over Baku's foreignheldoil assets between Rothschild, Shell,the Royal Dutch and the Nobel brotherswhich in the end was to leave only the lattertwo present, and finally the uproar causedby the foiled revolution of 1905/'06 did notfail to have its impact on financial marketsin Russia, and the northern Caspian oilbusiness could not escape the effects of theoverall instability.Leading western partners, whose assets inBaku had suffered to limited extents only,were the only ones who could provide thefinancial means to pick up where ventureslike the Emba-Kaspiisky, even though therehad been little sociopolitical unrest on thespot as such, were facing bankruptcy.The ones to save the day were the Europeans.By the end of the decade, along withmajor shares in originally Russian, Armenian,Azeri and Tatar companies in Azerbaijan,the northern Caucasus, the northeasternBlack Sea region and the lower Volgaprovince, the Nobel family had also obtaineda 42.5 percent stake in Emba-Kaspiisky.Ambitious plansHowever, it was not before 1912 thatthey finally started working - virtuallyalongside the Royal Dutch (nowRoyal Dutch Shell) which had obtainedits concessions on adjacentareas years later, and through directdealings with the Russian government."Royal Dutch Shell had beaten Nobel tothe Urals by a few months but by the latesummer of 1912 the Swede Wannebo andthe Russian Kusnezov were organising extensivedrilling and pipe-laying operations,working the Nobel parcels selected by companygeologist Fegraeus," Nobel family biographerRobert Tolf was to relate in his book"The Russian Rockefellers - the saga of theNobel family and the Russian oil industry"published in 1976."In a climate and setting even less hospitableto exploitation than Baku the pipelinewere laid, food and supplies brought in fromAstrakhan and transported by camel to Dossor,”the book relates. “Huge pits were dugand filled with winter snow to provide waterin the summer. Docks were built in Rakushaon the Caspian. As soon as the oil startedflowing refineries were added. The finishedproduct was shipped by barge directly to Astrakhan.Both Nobel and the Royal DutchKAZENERGY57

actualhad ambitious plans for future developmentand in 1916 the Emba fields were alreadythe third most productive in Russia. Bakuled with 7.5 million tons; Grozny yielded1.66 million tons, followed by Emba's twohundred forty-five thousand."“An unsolicited opportunity”Thanks to their control over transportationfacilities towards the north, the Nobel brothersdid manage to pick some fruits of theiroil field developments for some time, thoughnever to the extent they had done so in Baku.By assuring themselves of transportationand sales facilities from the very beginning,Nobel remained true to its tradition of secur-Caspian Sea, the Emba. Here, there existedan exclusive exploration license valid untilNovember 25, 1912, for a site of two millionhectares, from which at random zayavkiy,exploration sites of 37.5 dessiatin, could beselected. Oil finds on such a site granted theright to an otvod, or development license inthe order of 10 dessiatin.British capital“The license holder (whether the author refersto the Russo-Hungarian tandem thathad been working in the area before remainsunclear - ChvdL) had had to confinehimself to a number of manual drillings,which did show the presence of petroleumHenri Deterdinging markets and production simultaneouslyrather than the notorious policy pursued bythe world's leading oil producers up to thisday: pump first, market later.As for the Royal Dutch, ever dependent onoutside trade facilities, this was not to be thecase. In his voluminous work Geschiedenisder Koninklijke (History of the Royal (Dutch)in six volumes), the Dutch historian C. Gerretsonrelates to its venture as follows: "In1911 an unsolicited opportunity was beingoffered to obtain the supervision of an explorationoperation in one of these areas. Beyondthe desolate salt steppes of the Caspianlowland, only roamed by Kyrgyz herdsmen,on the Mugodshar mountain ridge whichseparates the basins of the Uralsk and Turgaydepressions, there is the source of a riverthat flows to the northeastern corner of thewithout, however, providing results in termsof commercially viable quantities,” Gerretsonwrites. “In 1909, the license holder hadtransferred his rights to a certain 'NorthCaspian Syndicate', which in the usual wayof participation by British capital in Russianmining enterprise had incorporatedthem in a Russian company, the shares ofwhich were in the possession of the British'Ural Caspian Oil Corporation', establishedin London on April 15, 1910 with acapital of 60,000 pounds Sterling, and outof which in their London issue only a smallpart had been taken by the public. In May1911, however, the 'Ural Caspian' managedto hit a powerful gusher near the Dossor saltlake, and this success of course triggered astrong increase of the share value of 'UralCaspian' as well as protest from numerousBaku companies big and small. The board ofthe British company decided to seize the op-58 № 5 (49), 2011

portunity swiftly. The license's expiring datedrew near, and so it was a matter of utmosturgency to make sure that the supervisionover further exploration was to be put intothe hands of a group that had sufficient capital,personnel and equipment at its disposition.""Mr. Five-Percent"It was at this stage where a company consistingof quite familiar names from the ranks ofthe Royal Dutch, popped up. The most respectableone was that of the son of the company'sfounding father Jan-Baptist AugustKessler, while the most notorious one wasthat of Calouste Gulbenkian's, the Arme-On the world's oil mapFrederick LaneThe Ural Caspian was meant to serve as acounterforce to Nobel's Emba Kaspiisky,and in the records of Royal Dutch and Nobelboth claim the honour of having developedthe fields of Dossor and Makat, both situatedhalfway the Emba and Ural rivers. In spiteof numerous appraisal drilling operationselsewhere in the area, including the southbank of the Emba, those two fields remainedthe only productive ones on the eve of theRussian Revolutions.Both companies' annals are contradictory,since up to this very day both claim to havebeen the license holder for the Dossor field.For what it mattered - since the intervennianmerchant son from Istanbul known asthe Royal Dutch moth or "Mr. Five-Percent".Inevitable was the name of Henry Deterding,Kessler Sr.'s successor and known asthe Napoleon of the oil business."The only ones who could provide this onshort notice was 'Exchange Chambers', 24& 28, St. Mary Axe, where Deterding andhis staff, to which now also Kessler's eldestson G.A. Kessler belonged, were at the steeringwheel of the affairs of the Koninklijkegroup," Gerretson relates. "Arm-in-arm withthe 'big brokers', one knocked on the doorhere and also this time not in vain. On June12 1911, an agreement was inked between'Ural Caspian' and a syndicate that consistedof Deterding, Gulbenkian, Lane and VonOfenheim. Within the agreement, the capitalof the British company was increased to1,000,000 pound Sterling.”tions of western oil companies wasdisrupted by the October Revolution.Attempts to get propertyrights back failed, but the RoyalDutch through the joint efforts ofDeterding, Gulbenkian and Krassinmanaged to compensate for theloss in purchasing contracts at considerablediscounts. As for Kazakhstan,the developments of the lateXIXth and early XXth Centurieshad put the country on the world'soil map once and for all.Emba field in Soviet timesKAZENERGY59

actualThe Caspian Sea is gradually turninginto a major oil region of Kazakhstan.Next year the republic expects to getthe first oil from the Caspian shelf.Kazakhstani shelf:a new center of globaloil and gas extraction60 № 5 (49), 2011

azakhstan sector of theCaspian Sea (KSCS) hasthe largest hydrocarbon reservesin comparison withother Caspian littoral countries.Кby Energy In the foreseeable futureFocus oil extraction on the shelfwill not only significantlyincrease oil production inthe country, but also strengthen the positionof Kazakhstan as an important supplier ofhydrocarbons to world markets. So, Caspianoil of Kazakhstan for some extent will be aneffective alternative for resources of politicallyunstable Middle East region and willhelp to compensate the effects of drop in productionin other major oil and gas centers ofthe world.Although certain works on the KSCS wereconducted before the republic gained its independence,the start year of the full studyand development of potential is 1993. Thenthere was formed the international consortium"Kazakhstancaspishelf", whose workhas proved to the world community a hugehydrocarbon potential of the KSCS.For example, during the years of independence,it was revealed more than 120 prospectivestructures on it with forecast reservesof 8 billion tons of equivalent fuel,including 4.5 billion tons of oil.It should be noted that the area of KSCS,proceeding from the geological conditions ofthe subsurface structure and other terms ofthe development of water area, is divided intothree zones, which are characterized by variousoil and gas potential, the conditions ofexploration and extraction of raw materials.In particular, in Zone 1 subsalt Upper Paleozoicdeposits are the main ones by expectedpromising resources.The big and the biggest oil and gas fieldswere discovered in this zone from 2000 to2004 - Kashagan, Aktoty, Kairan, now settlingdown in the framework of the NorthCaspian project. By the way, after the openingof Prudhoe Bay field in Alaska at the endof 1960, Kashagan is one of the largest oilfields in the world with recoverable hydrocarbonreserves of more than 10 billion barrels.In Zone 2, consisting of Kalamkas-sea, Auezovand Khazar sections, the Mesozoic complex ofrocks is considered as perspective. For thecurrent, date the industrial productivity ofMiddle Jurassic deposits here is confirmed.In zone 3, which includes parts of Rakushechnoyesea and Nursultan (N Block), Mesozoiccomplex is promising. Designated areas arealso distinguished by depth of water, ice andenvironmental conditions.Recall that according to the plan of developmentof the Kashagan field with geologicalreserves of 4.85 billion tons in 2010-11 it isprovided a conduction of exploration phase,as for 2012-20 years - industrial development.Exploration on Kayran will be heldbefore 2015, on Aktoty and Kalamkas-sea -up to 2017, on Khazar - to 2018, on Auezov- until 2019. On the site of Rakushechnoyesea a search phase will be completed in 2011,on the N block - in 2011-12, and explorationhere will be held respectively in 2012-19 and2013-19 years. The exploration period willbe followed by industrial exploitation of oilfields. Also in the near future, Kazakhstanwill begin exploration on the Abay block, later- on the Khvalynskoye and Central blocks.However, now, on results of seismic and geologicalprospecting, oil and gas potential wasproved on Khazar, Auezov and Rakushechnoyesea structures.Kazakhstan has been actively developingthe exploration and further production ofhydrocarbons on the Caspian shelf in partnershipwith interested foreign investors.Now the Caspian projects are representedby such leading oil and gas companies of theworld as ExxonMobil, ConocoPhillips, Shell,Total, Eni, LUKoil, ONGC and others. In recentyears, foreign investors have investedto the development of offshore fields in ourcountry tens of billions of dollars. For example,investments only to Kashagan weremore than $ 33 billion, the bulk of whichgoes for capital investments of foreign participantsof the North-Caspian project.Partnership with them has enabled the countryto get considerable experience in conductionof offshore oil operations and even todayto serve as a co-operator of offshore projects.At the same time, the country has all the potentialfor self-implementation of large offshoreprojects. The country has enough forfinances and resources, as well as technologicalcapabilities. In the future this tendencywill only intensify. Accordingly, a strategy forfuture cooperation in the implementation ofprojects in the KSCS is being formed: it mustbe based on equal partnership, with the gradualstrengthening of the role of Kazakhstan.Production potential. The Kashagan, Kairanand Aktoty fields have the bulk of thetotal hydrocarbon production from KSCS inthe longer term.In 2012 it is planned to produce 568 thousandtons of oil and gas condensate in totalfor KSCS, in 2013 – 9 124 tons, in 2014 - 13237 thousand tons, in 2015 - 14 900 thousandtons, in 2016 - 28 930 tons, in 2020 -65 225 tons. Until 2017 inclusive, the entirevolume of oil production will occur in zone1, while in 2018 - 41 870 thousand tons, andin 2020 - 61 877 thousand m. In this caseprior to 2015 will remain the sole KashaganKAZENERGY61

actualIn the future,during the2018-19 period,it is scheduledto begin theconstruction ofthe KazakhstanCaspian oilTransportationSystem (KCTS),includingYeskene-Kurykpipeline.oil field operated in the Caspian Sea, in 2016it will produce 28 million tons of crude oil in2020 - 59.5 million tons.Should be reminded that the total oil productionin Kazakhstan in 2020 is projectedto reach 130 million tons - in fact, on theCaspian shelf will be produced half of Kazakhstanihydrocarbons.It should be noted that the shelf productionis of different technological complexity andhigh capital intensity. All the more so, theworks on the Caspian Sea are complicatedby a combination of negative factors suchas increased sensitivity of the environment,shallow water, high reservoir pressure, asignificant sulfur content in the producedraw materials.That is why Kazakhstan is interested in accessto the most modern, cutting-edge technologiesand methods of offshore explorationand production, which will improve the effectivenessof all types of work in the longterm perspective.Therefore, the republic pays great attentionto the introduction of new technologies tothe geological exploration, drilling, offshorefields’ arrangement. And international experienceshows that intensive use of higheffective technologies such as horizontaldrilling, enhanced oil recovery techniques,three-dimensional seismic surveys underconditions of development of the "expensive"hydrocarbons allows to significantly reducethe costs associated with their explorationand production.The creation of an infrastructure to supportoffshore operations is directly related withthe terms and rates of development of structuresand fields of KSCS.In 2020 only at the Kashagan field 18 islandsof drilling and production will be built,3 of which will be built in 2012 as a part ofPhase 1 of development of this field. Thereare already built 17 major coastal infrastructurefacilities on the coast of the CaspianSea, including 10 - in Bautino. Also, the"KazMunaiGas" company in 2011 started toimplement a project of building the North-Caspian environmental base on oil spill response,which will ensure the environmentalsafety of oil production and transportation ofproduced raw materials.The capacity expansion of the Caspian PipelineConsortium can be considered as oneof the key infrastructure projects for KSCS(CPC), which began this summer. Alreadyby the first quarter of 2015 its capacity willbe increased from 28 to 67 million tons, 52.2million tons of which will fall on Kazakhstan'squota. As a consequence, the CTC willbe a major export destination for oil extractedfrom Kazakhstan's offshore fields.In the future, during the 2018-19 period, itis scheduled to begin the construction of theKazakhstan Caspian oil Transportation System(KCTS), including Yeskene-Kuryk pipeline.KCTS will provide transportation of 25million tons of oil per year at an early stagethrough the Baku-Tbilisi-Ceyhan pipelineto the world markets, with a subsequent increasingto 56 million tons.Forecast of productionof oil and gascondensate on KSCSdeposits (thousands oftons).The sources: Ministry ofOil and Gas of the RK,operator companies ofoffshore projects.62 № 5 (49), 2011

Универсальное решениезадач теплообменаСпиральные теплообменники – оборудование, широко распространенноеи применяемое в мировой промышленности. Компания Альфа Лаваль усовершенствовалаконструкцию и повысила их технологические характеристики.Исключительная компактность и эффект самоочистки делают спиральныетеплообменники Альфа Лаваль в высшей степени универсальным оборудованием– они применимы как в работе с жидкими неоднородными средами,склонными к образованию отложений на теплопередающих поверхностях,так и при наличии конденсации пара или газа в условиях высокого вакуума.Региональное представительство ОАО «Альфа Лаваль Поток» в Казахстанe050059, г. Алматы, пр. Аль-Фараби, 15,БЦ Нурлы-Тау, корп. 4В, офис 19, 17 этажТел: +7 (727) 311 13 70; факс: +7 (727) 311 13 71e-mail: dmitry.zhloba@alfalaval.com

actualKashagan:a lighthousefor investorsThe Kashagan project serves as a guide for foreigninvestors in developing the Caspian shelf64 № 5 (49), 2011

Now at KashaganPhase I preparationis going on, whichincludes receivingthe first commercialoil in late 2012.If at Kashagan everything will go accordingto plan, in 2012, a consortium will producealmost 0.57 million tons of oil. A year later,production will rise to 9.12 million, in 2014will rise to 13.24 million tonnes, in 2015 - upalmost to 15 million. Increase in productionwill provide two lines of work: drilling of newwells (13 in 2013-2014 years), and injectionof 50% of the extracted gas. While not as away to enhance oil recovery, but as a meansof disposal of hydrogen sulfide impuritiesthat impede commodity production of oil.At the same time year 2015 has to become alandmark for the development of Kashagan.Although the annual volume of productionduring his rise slightly, more than doublingof production well stock is planned- it willincrease to 67 units. And the end of 2015production levels will reach 450 thousandbarrels / day, which marks the realizationof fisheries, commercial and technologicalobjectives of Phase I. The way they will beresolved at this stage, will largely determinethe future course of development of Kashagan.And also becomes a kind of "masterclass", which Kashagan operator will holdfor members of other marine projects.Kashagan is paving the way. The secondhalf of this decade looks qualitatively as anew stage for development of Kashagan, andto develop the oil resources of Kazakhstan'ssector of Caspian Sea. If Phase II will be implementedaccording to plan (see «Partnersare discussing the price»), then from 2016 to2020 oil production at the field will increasefrom 28 million tonnes to nearly 60 million,which requres 75 wells to be drilled. In thelonger term, i.e. over the next decade, theshareholders will build 93 more wells, andwill raise annual production to 75 milliontonnesStarting from 2016, the development willinclude the new fields of Kazakhstan shelf- first Kairan, in 2018 - Aktoty and Kalamkas-sea(subsoil user for all - NCC), in2019 - Khazar, in 2020 - Auezov (a consortiumof EP, Shell, Oman Oil), Shell sea andH (Alliance KMG, ConocoPhillips and UAEMubadala Development Co.). In the nextdecade may other marine projects in Astana,including those agreements which weresigned this spring - "Abay", and "Satpayev,may enter into the production stage.But it is likely that marine subsoil users inKazakhstan, building their business models,will scrutinize not only the productionexperience of NCC at Kashagan, but alsosales policy and the consortium as a guidewhen choosing their own export routes. Representativesof the NCC previously statedthat for Phase I they believe in the priorityof the North-Caspian pipeline (better knownas CPC) and Atyrau - Samara. The first onestarts phased expansion of capacity from28 million this year to 67 million tonnes in2015, the second can at any time to increasepumping from 15 million to 17.5 million tonsper year.However, the interesting thing is that theconsortium (reported by sources close to it),also began to study options for export bypipeline Kazakhstan - China, whose capacityafter 2013 will double to 20 million tons;and of the Kazakh Caspian oil transportationsystem required after the start of PhaseII.Certainly, export "pressure" of Kashaganoil greatly help the progress of new pipelineprojects in various areas of Astana. And thuspave the transport routes for the next waveof marine operators. Kashagan "pioneer" onthe shelf will be a guide for them in the exportof Caspian hydrocarbonsKAZENERGY67

actualGreen Energyof KazakhstanDuring the recent years, Kazakhstan has been positioning the renewable energysources (RES) as one of the energy complex vectors. This is evidenced by theincreased attention paid to the process of their implementation by the governmentand a number of business structures. However, the formation of a stablecomplex of the renewable energy sources in Kazakhstan stipulates significantfinancial and technological investments with the direct involvement of the government,without which the renewable energy remains at virtual zero.The Renewable Resources. Kazakhstanpossesses sufficiently large potential of renewableenergy resources.For example, according to several studies,the gross hydro-potential of the Republic ofKazakhstan is roughly estimated at 170 billionkWh/year, technically possible to implementis 62 billion (economic - 29 billion, ofthem in use are 7.4 billion kWh/year).To date, the share of HES in the structureof generating capacities of Kazakhstan isonly about 12.3%. This figure is significantlylagging behind the developed countries.Moreover, 68% of the hydroelectric powergenerating facilities have worked for over 30years. The implementation of several largestHES projects will bring certain progress inthe next few years: Moinak HES with the installedcapacity of 300 MW, Kerbulak HESof 49.5 MW, Bulak HES of 68.25 MW.Despite the considerable potential for thedevelopment of large HES, Kazakhstan maywell learn from the development of minihydropower stations, which were partiallytested in the Soviet period. It is indicativethat the economic potential of small hydropowerstations is estimated to reach around7.5 billion kWh/year. On the basis of studies,the potential is possible to realize of at least480 projects on small hydropower stationswith1.868 MW general introduction capacity(8510 GWh, average annual electricitygeneration capacity).68 № 5 (49), 2011

actualThe wind energypotential inKazakhstan isestimated tobe from 0.929to 1.82 billionkW / year.State Support Priorities. Certain hopesmay be associated with the adoption in thepast few years of a number of legislative andindustry programs aimed at supporting renewableenergy sources.Even now we can talk about an increasinginvestors interest, including foreign investors(primarily China and Germany), to therenewable energy sources projects in Kazakhstan,due to the adoption of the key provisionsin the national legislation.Kazakhstan was the first Central Asiancountry to develop a strategy for the transiingenergy networks may be cost-effectivein energy-deficient regions of Kazakhstan.At the same time it is the renewable energythat can be the key factor in the developmentof remote regions.However, it is objective that the objects of renewableenergy are much less profitable andmore capital-intensive than the traditionalones. The private business is quite scepticalabout the use of renewable energy sources,including due to lack of awareness and lackof experience in their use. This requires aselective approach to their implementation,while attaches particular importance to publicsector support.Despite the measures taken at the nationallevel, the renewable and alternative energysources (excluding large hydro power stations)are not developed in Kazakhstan. Untilnow, the Republic has not implementeda single major project in this area, despiteseveral attempts of construction, in particular,of wind power systems.For example, according to the Ministry ofEnvironmental Protection of the RK, theshare of alternative energy sources to totalelectricity generation in 2010 amounted toonly 0.03%, according to the Ministry of Industryand New Technologies of the RK itis 0.46% (including small hydropower systems).According to the Kazakh ResearchInstitute of Energy named after S. Chokinthe operating power of the renewable energysources are mainly presented by severalmini-hydro power stations.This is dramatically lower than the levelfixed by the development of renewable energyin the developed world. For comparison,even in Russia, which is among the world'soutsiders on the use of the advanced renewableenergy sources, their share is fixed at1% of total electricity production, while theshare of thermal energy produced at theirbase is reaching about 3%.Given the energy produced by large hydroelectricpower stations, the share of renewableenergy sources in the energy of Kazakhstanis about 12.3%.Share of the windenergy stations(including largeHES) in Kazakhstanienergy industry.Source: Ministry ofIndustry and NewTechnologies of the RK.70 № 5 (49), 2011

44 percent ofexploited windpower plants arein Europe, 31percent-in Asiaand 22 percent-inNorth America.Because of the high manufacturabilityof the industry the development of windpower currently remains the prerogativeof industrialized countries, which also aredependent on the import of traditionalenergy resources in a greater extent. So,currently, 44 percent of exploited windpower plants are in Europe, 31 percent-inAsia and 22 percent-in North America.Assessing the prospects for development ofwind energy in Kazakhstan it may be saidthat achieving a significant share of windpower in total electricity production of thecountry is the issue of a long term.Geographical and, accordingly, climaticconditions in Kazakhstan characterizedby large lowland surfaces and relativelystable wind flows are favorable for thedevelopment of wind power. According toresearch conducted in the territory thereis a great range of areas where the averagewind speed exceeds 5 m / s, which is thecritical threshold for the work of wind powerplant. It is important that many of themare located close to regions with high powerconsumption (Almaty, South Kazakhstan,West Kazakhstan and North Kazakhstan).But this is all about a theoretical point of view.In practice, there are several problems thatprevent the development of wind energy atsufficient measure from the industrial pointof view, and not only in Kazakhstan but alsoworldwide. The main one - impermanenceof electricity generation. Even with averageannual wind speed of 5 m / s situations withthe failure of electricity generation in theabsence or insufficient wind velocity areunavoidable.And as electricity has a global technologicalproblem - impossibility of its accumulatingin sufficient quantities, the energy failuresmust be either regulated or compensated ina timely manner. This aspect is extremelyimportant for industrial companies, whoseshare of energy consumption in Kazakhstanis almost 70%, and they cannot build aproduction cycle, focusing on the weatherforecast.There are created complex systems aimedat the balance between production andconsumption of energy in Western countries,where the proportion of wind power issubstantial. Naturally, this leads to increasein the cost of production and distributionof wind energy. In addition, such systemsare effective, if only the proportion of windenergy in the total amount does not exceed10-15%.Keeping this in mind, withoutadditional risks for the energy systemKazakhstan theoretically could build windpower plants with total capacity up to 2thousand MW, but no more.Another way - the creation of reservecapacities. That is to say that, in fact, eachKAZENERGY73

KAZENERGY MEMBERSTransforming RuralKazakhstan:Corporate SocialResponsibility in ActionWith its sustained economicgrowth, Kazakhstan, a countryonce little known by theinternational community,is poised to continue its ascentonto the world stage.Kazakhstan has the world’s11th largest proven oil reservesand a strong mineral extraction industry,but the country’s wealth is not limitedto its natural resource sector—the peopleof Kazakhstan are themselves a key asset todevelopment.Kazakhstan citizens boast a literacy ratethat places them 14th in the world, and in2009, Kazakhstan was included for the firsttime into the UN’s list of countries with ahigh human development index (HDI). Inaddition, vulnerable sectors of Kazakhstansociety have seen a gradual improvement intheir quality of life: while in 1997, almost50% of the rural population was living inpoverty, today that number is closer to 15%.While such gains are the result of a confluenceof factors, businesses in Kazakhstanhave a key role to play in maintaining andaccelerating these positive trends. Cogni-76 № 5 (49), 2011

In order to understand the needs of the ruralZhylyoi district more clearly, TCO initiateda social baseline assessment in 2008. Thissurvey indicated a number of serious socialissues in the areas of education, health,youth culture and recreation, and a dearthof community engagement indicated by theabsence of active non-governmental organizations(NGOs).Thus, in 2009, TCO partnered with theEurasia Foundation Central Asia (EFCA),a local NGO with a wealth of experiencesupporting local initiatives in communitydevelopment, private enterprise, educationand public administration. Together, theylaunched the Zhylyoi Community EngagementProgram, a long-term program aimedin 2009, TCO partnered with the Eurasia FoundationCentral Asia (EFCA), a local NGO with a wealth ofexperience supporting local initiatives in communitydevelopment, private enterprise, education andpublic administration. Together, they launched theZhylyoi Community Engagzant of the benefits of continued equitabledevelopment in Kazakhstan, some companieshave begun to participate in the country’snascent corporate social responsibility(CSR) movement.The UN Development Programme (UNDP)has been working in Kazakhstan for 17years on a variety of initiatives aimed atbuilding a well-governed, widely prosperoussociety. According to Botagoz Burilkieva,Project Coodinator for the UNDP in Kazakhstan,“to be a ‘socially responsible business’means to be a sustainable business, ethicalin employee relations; a business aimed atlong-term successful development and not atshort-term gain.”One company that has taken the lead in socialresponsibility is Tengizchevroil (TCO).TCO is a partnership between Chevron, KazMunaiGas,ExxonMobil Inc, and LukArcoB.V. TCO is currently developing the Tengizoil field in the Zhylyoi district of Atyrauoblast, in western Kazakhstan, and has beenin operation since 1993. Then, Kazakhstancitizens made up 50 percent of its workforce.Today, Kazakhstan citizens hold 85 percentof TCO positions. In nearly all of the 15,174households in the Zhylyoi district, at leastone person works for Tengizchevroil or for aTCO contractor.at the sustainable development of the area’shuman potential.The initial stages of the project successfullypursued a multitude of goals, from raisingtest scores in area schools to training doctorsto work more collaboratively with patients.So far, 58 key community leaders have beentrained, 10 NGOs created, 48 training sessionsprovided to the wider community, and11 youth leadership clubs created at schools.In three years, TCO has invested a total of$830,000 in developing the human potentialof the Zhylyoi district, and the positive effectsare expected to continue as the programsupports the sustained growth of initiativesby both individuals and non-governmentalorganizations.For Burilkieva, programs like TCO’s initiativein Atyrau herald a new stage in Kazakhstan’seconomic development. “In general, Iwould like to note that CSR development isinevitable for society. It will be impossiblefor society to form a loyal relationship withbusiness if business does not participatein addressing social problems. Businessesmust build mutually beneficial partnershipswith all parts of society in order to ensuretheir long-term survival.”In all, TCO’s project has reached 4,645 localresidents, who have become participants,volunteers and beneficiaries. Residents ofthe region have learned that they do nothave to wait for help from somewhere else—they have been empowered to create theirown futures.KAZENERGY77

KAZENERGY MEMBERSZhersu Metal -the market leaderon steelworksin KazakhstanThe uniqueness and manufacturabilityThe plant started its activity in 2008. Overa relatively short period of time the companyhas achieved excellent operating resultswith significant potential for further sustainablegrowth.At present Zhersu Metal is one of the largestmanufacturers of metal structures inKazakhstan. Production capacity is about 20thousand tons of finished products per year.There are appropriate licenses for design,manufacture and CAR of metal structuresImportant distinctive feature of the companyis a clear orientation to the best internationalexperience and the latest technologicaldevelopments in field of designing andmanufacture of metal structures. This allowsus to successfully compete with foreignmanufacturers of similar products and keepabreast with international standards.In particular, on the stage of realization ofthe plant project leading brands such asItalian FICEP, German Weber Ko Mechanics,Russian «Protection of Metals» LLP and«FMP» SPE were involved as consultants.This step allowed us to build the optimaltechnological process and select productionequipment best suited for long-term developmentof the plant.By the current moment the plant is equippedwith modern, even unique for the practiceof Kazakhstan highly productive automaticlines and CNC equipment of leading worldmanufacturers.The plant has highly qualified, experiencedengineering and technical staff totaling 150people. Specialists for servicing high-techequipment have been trained at foreign factories,including factories of manufacturingfirms. For example, workers have passedlong internship on the production facilitiesof the FICEP company. Nevertheless, ZhersuMetal is making active efforts to furtherenhance the professional level of employees.Much attention is paid to social support ofworkers, creation of optimal conditions for78 № 5 (49), 2011

Zhersu Metal is a dynamically developingmanufacturing company of Kazakhstanthat achieved notable successesand managed to create a unique corporateimage during its existence.work. Of course, the positive effect of thiscontributes significantly to the success of theenterprise.Equipment for production details out of thecorners, channels, joists, corner plates wassupplied by FICEP; equipment for cuttingand bending of sheet metal - by GermanDr.Hochstrate etc.The plant is the only company in CentralAsia and CIS that have a complete set oflines of CNC FICEP. Also, the company hasits own design bureau. This level of technicalequipment allows us to solve a full rangeof production problems, from designing upto the direct production of high-quality finishedproducts.The quality and competitivenessBasic direction of activity of the plant is productionof metal poles for power transmissionlines of 35-1150 kV and equipment fortransformer substations.The company offers a wide range of products.The plant produces steel structures forindustrial and civil construction, steel structuresfor cellular and television communications,residential and industrial buildings,equipment for fitting out roads and railwaysand many other things.In general, Zhersu Metal production coversthe needs of electricity, oil & gas, road construction,communication and other enterprisesthat actively use the metal constructionsin their activities.The Company considers the quality of productsas an important competitive advantagethat allows expanding of market presence.Because of this, from the very beginning ofactivity of the plant the course was taken ontesting advanced methods of ensuring highquality of manufactured production thatmeets the needs of all customers.In particular, the plant has successfullyimplemented the international quality managementsystem ISO 9001-2009. It is alsoimportant that the company entered into aregistry of domestic producers of NationalWelfare Fund «Samruk-Kazyna», that is aconfirmation of the high assessment of theirproducts.The quality of applicable in the manufacturestructures and materials is confirmed by acompliance certificate from the manufactureron each lot. In particular, metal suppliersare selected on the principle of qualityconformity of raw materials, working in asystem of compliance of QMS ISO.The main suppliers of metal are the companiesthat have recommended themselveson the world market. Among them: Magnitogorskmetallurgical combine, West-Siberianmetallurgical combine, Novokuznetskmetallurgical combine, «Evrazholding»Trading House. At the same time, priorityin choosing a supplier is given for domesticcompanies: «KazFerroStal» LLP and thetrading house «Karmet».Careful monitoring of the quality of productsis carried out by department on qualitycontrol upon an organization standard of STLLP 40964908-01-2007. Also Zhersu Metalconstantly provides a feedback to customersand suppliers with the aim of uninterruptedincoming control of raw materials.Now, due to the active work of «Zhersu Metal», the plant is characterized as a leading enterprisewith high-tech modern production.The largest national companies of Kazakhstan,such as «KEGOC» JSC, «Kazakhtelecom»JSC, «KazakhstanTemirZholy» JSC,«Atyrau Zharyk» JSC, «Seldenkorgau Kurylys»RSCE have become the major customersof the plant's products.Not wishing to stop on reached, the «ZhersuMetal» JSC plant is planning a significantexpansion of production in 2012-2013. Inparticular, it is planned to install hot-dipgalvanizing plant.KAZENERGY79

KAZENERGY MEMBERS«Promstroy-Energo» LLP:efficiency and reliabilityThe leading company in themodernization of electric power complexSustainable development of Kazakhstan’selectric power sphere, ensuring stable growthof capacities, is the key tasks for Kazakhstanin the long term. Further steady progress ofthe economy, expansion of opportunities forexports of electricity and effective satisfactionof domestic needs of both business and populationhighly depend on it.A special place here is given to the level ofdevelopment of electric power infrastructure.Strengthening of this direction is seen as strategicallyimportant priority for Kazakhstan.Operations of such companies as «Promstroy-Energo» is of great importance in achievingthat task.Since its establishment in 2003, the companyhas successfully implemented a number of majorprojects in the electricity sector, includingthe expansion of 500 kV YuKGRES substation,construction of 500 kV «Shu» substationand others. This allowed the «Promstroy-Energo»LLP to create the image of effectivelyoperating and responsible company – a brandextremely important in conditions of marketcompetition.In general, the activity of «Promstroy-energo»LLP is associated with such complex and diverseworks in terms of technology industryas a construction and reconstruction of powertransmission lines (power lines) and 110, 220,500 kV substations, repair, installation andcommissioning of power equipment; constructionof cable and fiber-optic communicationlines, reconstruction of equipment of relay protectionand automatic of power transmissionlines of substations, the most complex specialoperations.The balanced structure of the company, technologicalcapabilities and a professional,well-organized work collective allow companyto implement the full range of tasks, oftenunique in their way, at the level of advancedstandards.In particular, the technical base of the companyis a specialized, fully equipped mechanizedunit, stationed in Karaganda.Successful completion of complex electric powerprojects is a good indicator of complianceof the company’s technical equipment withmodern requirements, as well as receiving ofST RK ISO 9001-2001 Quality ManagementSystem Certificate in 2005. Obtaining the Certificateof ISO was a sign of recognition of thefact that the company's activities are based onthe leading national and international qualitystandards.Over the last years «Promstroy-Energo» LLPentered the nationwide level of activity, carryingout high-tech installation and constructionworks on the entire territory of Kazakhstan.Construction of 500 kV Second TransmissionLine of Kazakhstan North-South TransitIn cooperation with «KEGOC» JSC, the nationalsystem operator of the unified powersystem of the Republic of Kazakhstan, «Promstroy-Energo»LLP has taken part in such alarge project as «Construction of 500 kV SecondTransmission Line of Kazakhstan North-South Transit», carried out in accordance withthe development program of electricity of theRepublic of Kazakhstan until 2030.Its necessity was conditioned by increasing ofelectricity supply level of deficient southernregions of Kazakhstan due to increasing ofthe output capacity of energy transmission inNorth-South direction up to 7-7.5 billion kWhper year, reliability and safety of the nationalelectricity network of Kazakhstan, the paralleloperation of power associations in Russia,Kazakhstan and Central Asia.80 № 5 (49), 2011

Thus, in the course of the project, the companycompleted the expansion of the 1st stage of500 kV YuKGRES substation in 2006.In particular, the enterprise had carried outthe installation of 500 kV GL317 gas-insulatedcircuit breaker in chain of shunt reactor R-3,the installation of three 500 KV BS, installationof control and power cables, cable trays,installation of F6-4 foundations for line portal.The next step of the company's involvementin this project was the construction of the 1stand 2nd stage of 500 kV «Shu» substation inZhambyl oblast of Kazakhstan. The constructionof substation with the installation of 500kV shunt uncontrollable reactor and 500/220kV auto-transformer, as well as installation of220 kV and 500 kV cells were done.Drawing on extensive experience of construction,«Promstroy-Energo» has completed theexpansion project of 1150 kV «Ekibastuz» substationin the Pavlodar region in 2009. In thesame year the company held a reconstructionof relay protection and automatics (RPA) ofthis substation, including the supply of equipmentand cable-wire products, installing thepower switchboard cabinets of DC power andlaying fiber-optic cables.On September, 17 of that year the second KazakhstanNorth-South Transit was launchedon the 1150 kV «Ekibastuz» substation withparticipation of President Nursultan Nazarbayev.The «North Kazakhstan-Aktobe oblast»projectAnother major project with the contractingparticipation of «Promstroy-Energo» LLPwas the construction of 500 kV «North Kazakhstan-Aktobeoblast» inter-regional powertransmission line in Aktobe and Kostanai regionsworth 19.9 billion tenge.Commissioning of the interregional powertransmission line linking the North Kazakhstanwith Aktobe region, in addition to solvingthe problem of the growing shortage of electricpower in Aktobe region, made it possibleto improve the reliability of electricity supplyto consumers and reduce energy dependenceof the Aktobe region consumers on supplies ofexpensive electricity from the Russian Federation.The project customer, allowing the connectionof Aktobe energy unit with a single power gridof Kazakhstan, is «Batys Transit».«Promstroy-Energo» during project implementationhas built a 486 km long, 500 kV highvoltageline with «Ulke» and «Zhitikara» substationsincluding fiber-optic communicationline.It is noteworthy that for the first time in theCIS «Promstroy-Energo» LLP had installed onthe «Ulke» SS 220/220 kV three-phase, phaseturnable transformer of forced flow distributionwith capacity of 400 MVA, designed andconstructed specifically for this project.Also, «Promstroy-Energo» has carried out constructionof objects of external power supplyof «Varvarinskoye» joint venture in Kostanairegion, commissioned by «AREVA T & D Kazakhstan»LLP.This project laid in construction of 110/10 kV«Barbara» substation with the installation oftwo transformers of TDN-16000/110-U1 andKRUN 10 kV, along with the reconstruction ofthe 220/110/10 kV «Lisakovskaya» substation.The Company participated in the replacementof high voltage equipment and the rebuildingof AL calls on substations of «KEGOC»JSC, among them the central TEN in Karagandaregion (2004-05), Sarbaisky TENs inKostanay region (2004-05), Akmola TEN inAkmola oblast (2006 year).Construction of KoksairancounterregulatorSignificantly, that in 2009 «Promstroy-Energo»,commissioned by «Seldenkorgau Kurylys»RSCE, successfully implemented the investmentproject for the construction of flood control– Koksaray counter-regulator on the SyrDarya river.In particular, the company carried out excavationworks of 300 thousand cubic meters, theconstruction of outlet channel of 500 m long,and the construction of a 800 meters long dam.Design capacity of counter-regulator is about3 billion cubic meters of water, thereby thethreat of flooding territory of South Kazakhstanand Kyzylorda oblasts was reduced, andan irrigation water reserve for the agriculturalsector was created. Rates of construction ofthis building are unprecedented.The first test was already passed with a facility.In the flood period this year it was managedto accumulate more than 900 millioncubic meters of water and provide flood safetyof South Kazakhstan and Kyzylorda regionswith the help of Koksaray counter-regulator.Also it has been made a discharge of the accumulatedflood water through the constructionof water discharge counter-regulator into theSyr Darya river to fill the Aral Sea.These tests demonstrated the high quality ofengineering and construction works carriedout by the company as one of the main buildingcontractors of counter-regulator. In general,the «Promstroy-Energo» LLP demonstrateshigh efficiency indicators and reliability, asevidenced by large-scale projects, that characterizedby the complexity of implementation.Certainly, this is a guarantee of company’s futuresuccess in creation of effectively operatingand advanced electricity infrastructure ofKazakhstan.Since itsestablishmentin 2003, thecompany hassuccessfullyimplemented anumber of majorprojects in theelectricity sector.KAZENERGY81

expert opinionWorld EnergyOver the last decade in the developmentof world energy important trends which inuncontrolled flow would threaten stabilityof this area were revealed. These trends include:• changing relationship between consumersand producers, increasing competitionfor the limited energy resources;• high rates of energy consumption growthand change of its regional proportions;• high proportion and growing volumes ofconsumption of fossil fuels;• slowing down of energy supply growthrates ;• problems of providing investments to thedevelopment of energy sector;• change of the energy supply structure andenhancing the role of individual suppliers;• rise in energy prices and their volatility;• increasing of tension in providing energyneeds of transport and disproportions inthe oil refining;• growth of volumes of international energytrading, development of infrastructurecomponent of the energy supply and exacerbationof risk;• strengthening of political risks, includingtransit onesThe current situation in the global energysector is characterized by the intensificationof the contradictions between the majorplayers in international energy markets.The practice of relationships between producersand consumers, developed in the lateXX century, rooted in the past. A work ofexisting regulatory mechanisms of the worldenergy market becomes unusable, increasedcompetition among consumers, fueled by theadvent of powerful market players, like Chinaand India is becoming evident.While the main consumers of energy resourcesare highly developed powers anddeveloping countries in Asia, most of theworld's hydrocarbon reserves are concentratedin relatively small group of developingcountries and states with economies intransition. Such large-scale consumers likethe U.S., EU and China are focusing theireconomic as well as political resources forexpansion in the same markets, which leadsto increase of competition.82 № 5 (49), 2011

expert opinionExistingregulatorymechanismsof the worldenergy -unusable, bigcompetitionamongconsumersis fueled bythe adventof powerfulplayers, likeChina and India.84 № 5 (49), 2011viding about 40% of power consumption.It is followed by natural gas (28%), coal(20%), renewables (7%) and nuclear energy(5%). Shares of oil and natural gas willrise, while the share of coal and nuclearpower - decline. It is possible that in thefuture consumption of nuclear energy willstabilize and begin to expand the scope ofalternative energy sources, but it will notaffect the basic trends, at least over thenext 15-25 years.In more distant perspective the structureof the global energy balance is likely toseek for transformation primarily by twomain scenarios.The first one means a gradual shift fromoil to gas, approximately the same whenoil replaced coal. Then, it is expected toshift to renewable sources and, obviously,to nuclear energy. The "black gold" willretain the position as an important sourceof energy, at least until the middle of theXXI century.According to the second scenario plan, ifa progress in the field of hydrogen technologies,enabling a rapid displacementof gasoline engines will take place in thecoming decade, so a reduction in oil consumptionwill begin much earlier - byabout 2025. But for now this is unlikely.The energy intensity of world economy,mainly due to the developed countries,will gradually decrease, but linear dependencebetween GDP growth and increaseof energy consumption will remain. Thecontinuing rise of the global economy forsome time will pull the energy demand.But consumption is slowing down, moreand more lagging behind rates of GDP.This means that the global economies beginto adapt to higher prices through reducingof energy consumption and use ofalternative and renewable energy.The share of energy in total expendituresof GDP of Western countries will continueto decline. This eliminates the possibility torely mainly on energy as a tool for nationaldevelopment even in the medium term.Consumption of "blue fuel" will grow mostrapidly in APR countries (an average of3.6% per year), Central and South America(3.2%), Middle East (3.1%), Africa (4 1%), increasingby cheapening and improvement ofits technological systems of transportation(including LNG) and use.The supply of gas will expand due to a numberof major projects on its extraction: inRussia (the Yamal Peninsula, Eastern Siberia,the Far East and the Kara Sea shelf),Iran (South Pars field, etc.), Qatar, SaudiArabia, UAE, Kuwait, Algeria, Libya, Azerbaijan,Kazakhstan, Turkmenistan (shelf ofthe Caspian Sea) and other regions.Due to the predictable reduction of oil outputin industrialized countries the volumeof its imports will increase substantially,especially from politically and economicallyunstable countries of Persian Gulf.Thereby, the issue of diversification of supplysources becomes topical. In this regard,it is clear what caused a growing attention ofthe major energy consuming countries andmajor international corporations to the resource-baseof states not included to OPEC.

expert opinionKazakhstan motivesof Arabian GulfTby Yuri Sigov,Washingtonhe high level oil prices combinedwith the continuingpolitical instability in severalcountries of the MiddleEast and North Africa makemore urgent the need forclose cooperation betweenthe countries-exporters of"black gold" which remainunaffected to global crises.Although, such countriesmay differ quite substantiallyboth in area and population, as wellas in economic and technical potential, theircooperation in the field of energy would notonly bring good dividends to themselves, butalso play an important role in stabilizing theworld oil and gas markets, and help to avoidthe crisis for those, who still imports significantvolumes of energy sources.These mutually beneficial prospects includethe expansion of energy cooperation betweenCentral Asian countries, especially Kazakhstan,with the states of the Arabian (Persian)Gulf, that are being very close to oneanother in geographical sense, however, untilrelatively recent time they have showedmutual interest only indirectly.Coordination of international oil prices ispossible even without being in the OPECIt is known that Kazakhstan is among thetop ten countries of the world on oil reserves,and in Central Asia Kazakhstan plays a keyrole in supplying "black gold" through Russianterritory to the North as well as to theWest across the Caspian Sea and Azerbaijanto the European markets, and also eastwardsto China.According to the strategic plans of its economicdevelopment Kazakhstan in the nextfive years will increase export of oil (over20 years of independence, oil production inKazakhstan has tripled, and natural gas increasedup to five times), thereby being oneof the few regions of the world where it willbe possible to increase production volumeswhen it falls in a number of present leadingexporting countries of the "black gold".In addition, for the end of 2012 Kazakhstanis planning to begin industrial oil extractionat Kashagan - the largest field on theCaspian, making the republic one of the keyplayers in the oil production and oil exportsnot only regionally, but also globally.The gas supplies from Kazakhstan abroadalso will be expanded, plus Astana will playan increasingly important role as transitcountry on natural gas supplies from Turkmenistan,and in perspective – Azerbaijan’ssupplies to the western regions of China.All of this cannot help attracting an interestfrom the Arab Gulf countries, which playa leading role in world energy markets andvenues, and at the same time they are interestedin the coordination of policies tomaintain high prices for energy resourceswith those who supply them to major world86 № 5 (49), 2011

Among the Central Asian states Kazakhstan has the best chanceto be firmly settled in the main oil-exporting region of our planetmarkets from other regions of the world, includingCentral Asia.It is noteworthy that if the Arab Gulf countriesalmost with their full complement arebeing leading and the most influential membersof the Organization of Petroleum ExportingCountries OPEC, Kazakhstan, likeother oil producing countries of the post-sovietterritory (Russia, Azerbaijan) is not includedto this organization.Nevertheless, Kazakhstan would be able toclosely cooperate with Saudi Arabia, Kuwaitand United Arab Emirates (the largest oilexporters in the region) and Qatar (the mainplayer in the Gulf on the export of naturalgas) as to maintain high international energyprices as well as when discussing newroutes for pipelines in various directions.It is important to note the fact that Kazakhstanhas no political or economic disputeswith the Arabian Gulf countries, betweenAstana and the capitals of the Gulf monarchiesa steady dialogue is maintained at thehighest level and at the level of business cooperation,which also creates very favorableconditions for strengthening inter-regionaland bilateral cooperation.Also the very mutual energy interests makesuch Kazakhstani connections with thecountries of the Arabian Gulf truly profitableand attractive for both parties. Exceptthe energy sector there are not so much economicinterests of the Arabian Gulf countriesin the post-soviet space, particularly inCentral Asia.But in cooperation with Kazakhstan suchinterests are being from the very beginningand this would be a good idea to be used byAstana in its own plans as well as in expansionthe interest of leadership of the Arabianmonarchies in republics neighboring to Kazakhstan.For its part, Kazakhstan could have beenmuch more actively using the potential ofthe Arab Gulf countries, included to OPEC,for pushing its interests to the world marketsof oil export. Especially considering thefact that Astana in the nearest five or sevenyears can expand its export capacity of energyresources in the direction of Chinese andEuropean markets.Saudi Arabia, UAE and Qatar - the mostpotentially lucrative partners for Kazakhstanin the energy sector. But about the other Gulfcountries Astana should not forgetBased on the current volumes of oil and gasexport Saudi Arabia and the UAE could beregarded as the most beneficial partners forKazakhstan in the Arabian Gulf on oil sector,and Qatar - on the export of natural gas.As for Riyadh and Abu Dhabi, Astana has alreadyestablished close ties with them bothat the level of heads of state and in economiccooperation.It should be recognized that the potential ofthis cooperation is obviously not used to fullcapacity, especially regarding the sale of oilthrough the "swap replacement supplies" atKAZENERGY87

expert opinionKazakhstanwould covervolumes of oilsupplies to thewestern regionsof China forSaudi Arabia andthe UAE.88 № 5 (49), 2011the markets, which have the most favorablegeographical location both to the region ofCentral Asia and the Arabian Gulf.So, with benefit for itself Kazakhstan wouldcover volumes of oil supplies to the westernregions of China for Saudi Arabia and theUAE. And the Arab Gulf countries could noless successfully promote and supply Kazakhoil quota to markets of many Africanstates as well as South-Eastern Asia countries,India and Pakistan.There is a good chance for Kazakhstan tostrengthen cooperation on gas suppliesto world markets with Qatar - one of theworld's key exporters of liquefied naturalgas. This is especially actual due to the factthat Kazakhstan is one of the key players onthe gas market of western China that potentiallywill be of interest for Qatar in the caseof laying the Trans - Asia gas pipeline fromthe Arabian Gulf region, Iran and Pakistanto the Caspian Sea and Central Asia.By the way, Kazakhstan has successfullydeveloped such collaboration on "mutualexchange basis" with another state,overlooking the Arabian (Persian) Gulf - Iran.Kazakhstan's oil is sold by Iran to nearbymarkets, while the same amount of oilKazakhstan in return to Iranian suppliessales in China markets, as well as to Europeancustomers.For Kazakhstan the expansion of energy cooperationwith Iran would be one of the importantcomponents of foreign trade policyfor today. But here Astana will have to considera hard struggle for spheres of both politicaland economic influence, which is ledby the two largest countries in the region -Shiite Iran and Sunni Saudi Arabia.Kazakhstani leadership should bear in mindthat Riyadh and Tehran – are unapologeticrivals of the region, and the observance offine political balance in the Gulf for Astanais of paramount importance.Such consideration of the interests in theArabian Gulf region Kazakhstan shouldabide for the reason that there are stilltense relations between Iran and the UnitedStates (Astana has established very closeties with them not only in "big politics", butalso in energy industry) . Besides, consideringthe obviously incomplete "revolutionaryprocesses» of so-called "Arab spring", consequencesof which may still very ambiguouseffect on the entire state of global energymarkets.Investments from the Arab Gulf countries tothe energy sector of Kazakhstan - and why not?Investment area is of particular interest infurther expansion of cooperation betweenKazakhstan and the monarchies of the ArabianGulf. It's no secret that, immediatelyafter the collapsion of the Soviet Union, Kazakhstanhad to urgently seek the externalsources of financing for a wide range of energyprojects, and for keeping mining andtransportation infrastructure in good condition.The largest U.S. energy companies were thefirst to come to Kazakhstani energy market,and today the American capital remains akey one in the energy complex of the republic(the total amount of the U.S. investments toKazakhstan is over 11 billion U.S. dollars).Such American companies as "Chevron","ConocoPhillips" and others have createdin Kazakhstan successfully operating jointventures, and they are intended to work inthe Kazakh energy market for the long term.At the same time European companies havesignificantly activated in the Kazakh energymarket. They invest money less than Americans,but it is worth considering at the sametime that more than 40 percent of all invest-

ments received by Kazakhstan from abroadaccounted for the EU.Energy giants from France ("Total"), Italy("ENI") and Spain ("Repsol") invested considerableresources to a number of projectson oil production in Kazakhstan shelf of theCaspian Sea. And energy supplies from Kazakhstanto Europe by 2015 will be able toensure nearly a quarter of all energy needsof States inside the EU.Should not be forgotten that so far it is notwithdrawn the issue of laying the Trans-Caspian gas pipeline "Nabucco", in whichkey roles should play exactly European companies.And by the EU is Kazakhstan, aswell as other potential participants of thisproject (Azerbaijan, Turkmenistan) expectinga minimum of 12-15 billion euros in investments.And there is not less aggressive and activework on the investment market of Kazakhstanienergy from neighboring China. Chinesecompanies with the full support of thestate intend to further expand their investmentopportunities in Kazakhstan and deployto the maximum both oil and gas flowsof Kazakhstan itself, as well as of nearbyCentral Asian states to their side (includingthe use of Kazakhstan as a transit countryfor Turkmen gas supplies).On this background the Arab Gulf countrieshave very large financial resources, whichto the mutual benefit with these states Kazakhstanwould use both to modernize itsenergy industry (buying advanced Westernequipment and training national staff in Europeand the U.S.) and for the constructionof alternative pipelines to new markets andpotential oil and gas importers.Yes, Saudi Arabia, Qatar and the UAE stillhave more funding not only to the territoryof Kazakhstan but also to other CentralAsian projects for construction of mosquesand religious, trade objects, office and hotelspace. But investment cooperation in thefield of energy between Astana and the Gulfmonarchies is quite possible and it should bepushed and promoted.It's no secret that the Gulf Arabs - very slowpeople, they do not hurry in decision-making,but at the same time very pragmatic andcapable to count a prospect and real benefits.Therefore, if there is a political stability, investmentclimate is quite comfortable andcooperation with leading European partnersis successfully carried out, financial cooperationof Kazakhstan with key states of theArab Gulf might be a very promising area ofinter-regional ties.Taking into account the fact that in the nearfuture Kazakhstan will be one of the few energyexporting countries in the world thatwill continue to grow production of "blackgold", the Arab investments could play animportant role in strengthening the positionof Astana as a main energy player inthe whole Central and Southwest Asia, aswell as help the Arab Gulf States to obtainfinancial and political dividends from suchcooperation with Kazakhstan.After all, with all existing business controversies,the economy volumes and membershipin various international cartels andother energy associations, Kazakhstan andthe Arabian Gulf countries still have verymuch in common - and on this basis it wouldbe wise for both sides to look for the points ofconvergence of mutual interest.And, if such cooperation is supported by mutualwill and desire (including - at the highestlevel), then the Arabian Gulf has everychance to become an important partner forAstana not only in the Middle East but alsoat the global energy level.the Arabinvestmentscould play animportant rolein strengtheningthe position ofAstana as a mainenergy playerin the wholeCentral andSouthwest Asia.KAZENERGY89

«Energy battle for Kazakhstan»?It was connected mainly to the fact thatover these years in the country there was remaineda stable political environment; U.S.companies, even if there were some problems(they were especially uncomfortable ofa high-level corruption, frequently changinglegislation and other interference), still reliablyreceived high profits. And the commonvector of political and economic cooperationbetween Kazakhstan and the United States(the same for the Republican or Democraticadministration in the White House) gave aclear signal to U.S. companies operating inthe energy sector, to preserve and expandthe investment cooperation.It is also important that from the start ofworking in the Kazakhstani market U.S.energy companies had not actually met anyparticular competition not from Russia, norEuropean partners, nor the neighboringCentral Asian influential powers (such asChina, Turkey or Iran). However, over thelast years, the situation of increased competitionin the Kazakhstani energy markethad created a lot of problems for U.S. companies,and in the future there will be moreand more.Kazakhstan's «Path to Europe»through «big power»?Another important investment contributorto Kazakhstan's energy sector is still EuropeanUnion.Leading European countries also activelyuse the expansion of economic cooperationand trade with Kazakhstan of all kinds - especiallyto strengthen its presence throughoutCentral Asia. In addition, the Europeantrade with Kazakhstan in terms of volumesgreater than analogous indicators of theother four countries of the region taken together.For Kazakhstan, the expansion of a diversecollaboration with the European Union, including- the energy sector, makes it possibleto rapidly implement defined by Astana atthe highest political level «Path to Europe».It means the modernization of the Kazakhstanstate with benchmarks to key Europeanvalues and «common rules of a game». And«big power» in this area provides the republicsubstantial assistance, and additionallymotivates the unified European leadershipin Brussels to forge tighter ties with Kazakhstanin all areas.The French and Italian energy companiesshow a special interest for the Kazakh energy.So, the French energy company «Total»has 16.8% of shares in an international consortiumthat develops the Kashagan oilfieldin the Caspian Sea. Due to the fact that, ingeneral, Kashagan is the largest oil field inthe world, opened over the last 30 years (andfrom the start of operation by 2015 oil productionin Kazakhstan will increase to 60million tons), the French and the ItaliansSeveral yearsago, thetotal amountof foreigninvestments intoKazakhstan'seconomyamounted to $97.6 billion, andthe lion's shareof these fundswent exclusivelyto the oil and gassector.KAZENERGY93

expert opinionKazakhstanprovides for todaymore than 20% ofthe energy needsof the EuropeanUnion, and by 2015this number couldrise to the quarterof energy suppliesneeded by theunited Europe.are intended to long-term working in the republicand participation in the developmentof its energy natural resources.Let me note that more than 40% of all foreigninvestments to Kazakhstan are comingfrom EU countries. Two-thirds of thisvolume exclusively fall to investments in oiland gas sector of the country. It's also importantthat Kazakhstan provides for todaymore than 20% of the energy needs of theEuropean Union, and by 2015 this numbercould rise to the quarter of energy suppliesneeded by the united Europe.Without a doubt, one of the most importantconnecting links between Kazakhstan andthe EU, is the idea of laying the Trans-Caspianpipeline within the framework of the«Nabucco» project. Brussels is hoping thatKazakhstan therein will be still involved,and by this way the volume of energy cooperationbetween the two sides could dramaticallyincrease.In this case, for their part, the Europeancompanies would increase their investments(and they have been repeatedly requested ofthis by Kazakh side at the highest level) intonew technologies (and not only in oil andgas) and non-energy sectors of the economyof the country. But just in the case, of course,if Astana connects to the «Nabucco» project,and through its own channels motivates itsCentral Asian neighbors and Azerbaijan forthe participation in the project.Yes, here it is certainly needed to considerthe fact that Kazakhstan plays not a leadingrole in commercial hands of «Nabucco»,because the main «gas players» here forEurope are Turkmenistan, in part - Uzbekistanand Azerbaijan. But political power ofAstana and personally of President NursultanNazarbayev in this region is very high,which may under certain circumstances providethe «Nabucco» some support.For Europeans, it is also important that Kazakhstancoordinate its energy policy withneighboring Central Asian countries, andattract European companies to the regionfor establishing delivery of energy resourcesto European markets. Such cooperation iscarried out within the framework of the internationalproject TRACECA, as well as theprograms of «International transportation ofoil and natural gas to Europe».Also, it is essential that European energycompanies have already settled, and accustomedto work in new conditions of Kazakhstan.And, taking into account, the close politicalties between the EU and Kazakhstan,energy cooperation - including the investmentarea, is quite promising for the future.But now, it slightly «dipped» due to seriousfinancial and economic problems facing theEuropean Union.But Astana and Brussels preserve the generalvector for understanding and cooperation,although the amounts of such cooperationwill be gradually declining for quiteobjective reasons. And one of them - a remarkableupsurge from China in working oninvestment projects in the energy sector ofKazakhstan.Beijing calculates the Kazakh energysector "for long"The current economic relations betweenChina and other countries, especially in thefield of the energy sector, are based exclusivelyon a pragmatic ground, deprived offrills of «high politics» and, as a rule, arebased not only on a «friendship on business94 № 5 (49), 2011

down», but also on strong and reliable politicalcontacts at the «top».Exactly these components of strengtheningthe position of China in Kazakhstan togetherwith the importance of getting fromAstana mineral and energy resources haveplayed a crucial role in the current state ofinvestment cooperation between Astana andBeijing.In fact, ever since gaining the independenceof Kazakhstan, the Chinese government haspaid particular attention for cooperationwith its Central Asian partner. All theseyears on the level of heads of the states andheads of the governments there remainedvery close personal ties, regardless of whoheld these offices at various times.Also important the fact that over the pasttime, the Chinese offered Kazakhstan lucrativefinancial conditions for the implementationof all oil and gas deals withoutexception, in comparison with American,European and Russian competitors.Symbolic, and in many ways a breakthroughin this area is considered a visit of ChinesePresident Hu Jintao to Kazakhstan in August2007, that laid the foundation for agradual strengthening of the Chinese presencein the energy sector of the country. Inthis case, an important part of cooperationbetween Beijing and Astana was the layingof pipelines to transport crude oil and naturalgas from Kazakhstan to industrial facilitiesof Xinjiang Uyghur Autonomous Regionof China.In this regard it should be noted that neitherRussia nor the U.S. nor the EU countrieshave not offered Kazakhstan an activeconstruction of new pipeline routes (no oneremembers anything about the Caspianpipeline to Russia) and much less they weregoing to invest to them. China for its partstakes at a long-term cooperation in the«pipeline diplomacy» - and even less for thenear than for long-term perspective.According to American experts, another majorattractive aspect of Chinese investmentexpansion is the fact that Chinese companiesalways overpay for the acquisition forthose or other oil and gas assets in Kazakhstan.By what, on the one hand, they cutoff their direct competitors from the energydeals (USA, EU. Russia), on the other hand– they more often get a carte blanche for futurework from the Kazakh side.Thus, in order to capitally penetrate to Kazakhenergy market, China deliberately offersa much larger amount at acquisition ofcertain energy assets in the country (for example,for the purchase of «Nations Energy»Chinese offered $ 4.18 billion). Plus, Chinahad intended to buy the American oil companyUnocal through which they plannedto enter into several energy projects of Kazakhstan.It is also significant that at the beginning ofthis century, China did not appear almost atall in the list of investors of Kazakhstan andeven more so - in the energy sector. But forthe rapid development of China's economyBeijing became more actively looking forsources of energy. And Kazakhstan, like otherCentral Asian countries, was the first in«the Chinese energy object-glass» due to theclose borders of China's geographic location,and a relatively organized system of Sovietrefining and transportation infrastructure.Chinese oil companies started to behave inKazakhstan so successfully and actively thatlast year they participated almost in half ofextraction of all Kazakh oil. Joint ventureswith Chinese participation extracted 22 outof 40 million tons of oil in Kazakhstan. Andcompanies that are completely controlled byChinese capital extracted 18 million tons ofoil from Kazakhstan's subsoil.As a result, we can confidently say that theChinese «oil investment pressure» in Kazakhstanwas of the fastest time of implementation,and of volume growth. For example,in 1999, China had invested to the oilsector of Kazakhstan only $ 5 million. Butlast year it increased more than a hundredtimes - $ 550 million China invested to oiland gas sector of the country.Only over the last five years, Chinese companieshave acquired so many assets in theoil field of Kazakhstan that today they controlabout 1 billion tons of oil reserves of thecountry. Among the largest investment projectsundertaken by China in Kazakhstan, itis worth to mention the acquisition by theChina National Petroleum Corporation 70%of shares of «PetroKazakhstan»; there is aChinese interest in the Karazhanbasmunaithe energycompaniesfrom the UnitedStates invested$ 9.34 billion justto the extraction ofnatural resources,including $ 1billion investedinto Kazakhstan'soil sector byleading U.S. energygiants as Chevron,Exxon Mobil andConocoPhillips.KAZENERGY95

expert opinionIn this regard itshould be notedthat neitherRussia nor theU.S. nor the EUcountries havenot offeredKazakhstanan activeconstruction ofnew pipelineroutes (no oneremembersanything about theCaspian pipelineto Russia) andmuch less theywere going toinvest to them.oil field which has proven reserves of 46.6million tons of oil and in some other projects.We must not forget that in addition to oiland gas sector, China also very actively investsenormous sums to mining and metalsindustry of Kazakhstan. Since the end of 90sof the last century, China's investments toKazakhstan exceeded the amount of $ 3.6billion, making China the eighth foreigninvestor in the country in terms of volume.In this case $ 1.3 billion China invests exclusivelyto the mining industry of Kazakhstan'seconomy.And therefore it is not surprising that almostall of Kazakhstan's exports to China - a raw,first of all - energy raw. Oil and gas is abouta half of Kazakhstan's exports to China, andChinese themselves over the last few yearsin exchange for Kazakh raw materials actuallyturned the republic into the extremelyprofitable for themselves a market for Chinesegoods.Again, unlike Europe, USA and Russia thatcannot boast of these "market achievements"in Kazakhstan, China not only graduallypresses the Kazakh market under itselfwith goods, but also uses the republic's territoryfor transshipment of goods to the entireCentral Asian region as well as surroundingareas of Afghanistan, Russian Siberia, theUrals and the republics of Transcaucasia.Recently China signed an agreement withKazakhstan on cooperation in the field ofrenewable energy sources, co-financing thesecond stage of gas pipeline from Kazakhstanto China, and loan agreement on thereconstruction of an oil refinery plant inAtyrau, Western Kazakhstan.Also, the case of pipeline cooperation betweenthe two countries comes at an acceleratedpace.One gas pipeline, which is 1304 km long,from the Kazakh-Uzbek border to the borderwith China is already laid. There is completedan installation of the second stage ofthe pipeline which length is 1,500 km (itsthroughput capacity - 10 billion cubic meters.of natural gas) through Beineu, Bozoy,Shalkar and Samsonovka to the westernregions of China that thereby makes it possiblefor Beijing to get oil and gas from theregion of the Caspian Sea (and so in the futureto connect Turkmenistan and Azerbaijanto these projects and supplies).It may also be noted the fact that the gasfield of Zhanazhol in Aktobe region is alsopotentially attracting Chinese companiesfor possible investment. But the volume ofdeposits is unlikely to suit the Chinese interms of long-term gas supply (which is forthe Chinese - the main priority).According to experts over the next two orthree years, the Chinese investments to theenergy complex of Kazakhstan will exceed$ 20 billion and it is important to note thatunlike Russian and Western investments,the money comes from China to Kazakhstanalways without any influence of politics andideological «binding».China traditionally has never discusses thegranting of loans to Kazakhstan in a «package»with human rights, freedom of press,of assembly and political parties, and manyother «similar conditions» that are always atthe forefront in Washington and Brussels.So, without a question, the fund, «Samruk-Kazyna» received from the State Bank ofChina a credit of $ 3 billion, and also therewas granted a Chinese loan to Kazakhstanin $ 5 billion for the construction one of thepetrochemical complexes. And there are stilla lot of China's investments for uraniummining, the development of the nuclear industryand other energy projects of Kazakhstan.In general, the overall strategy of China infield of investment to the energy complex ofKazakhstan in comparison with similar policiesof the U.S., EU and Russia looks morepurposeful, calculated for the long term andin financial terms more profitable for Astana.Further implementation of this policy ofBeijing could be prevented by a heightenedanxiety of the Kazakhstani governmentabout the excessive Chinese control overthe Kazakh energy complex with the help of«long-yuan», and any serious disruptions onworld energy markets in the future.96 № 5 (49), 2011

projectsTHE ENERGYOF WORDby Zhuldyz ZhumadilovaNational oil and gas company «KazMunayGas» and«KAZENERGY» Association summed up the third Republicancontest of journalistic mastery, The Energy of Word.his year, the organizershave decided to broadcastonline the final meeting ofthe jury. It stands to mention,it was an unprecedentedstep. Usually in such conteststhe decision makingprocess is not advertised.The more interesting wasTby Energy to hear the opinion of authoritativeexperts, that theFocusindependent panel of judgesincluded such people asUzakbai Karabalin,Namazaly Omashev, Aidos Sarym, MichaelDorofeev, Fatima Kosaeva. Talk turned outopen, and sometimes quite flattering to thecompetition. Members of the Jury unwittinglytouched on urgent problems of modernjournalism in Kazakhstan....Namazaly Omashev, a playing coacher of theKazakhstani journalism, took the floor first.As organizers intended, a recognized politicalwriter Namazaly Omashev, the Dean ofthe Department of Journalism and Politologyof the Eurasian National Gumilev University,should have assessed the entries inthe Kazakh language. “Most of the authorshappened to be familiar to me. Many of themare my students,” – started Namazaly Omashev.This is not surprising, because Professorfor many years has been working withthe students of Kazakh National Al-FarabiUniversity and the Eurasian National University.But, Omashev liked the works byan unknown author who had sent for thecontest two problematic materials, and twocorrespondences. Professor immediatelymade it clear that he considers the author isworthy of the Grand Prix. "At present time,a reader is not interested in the bulk of thearticle. To make the material readable, youneed to find a suitable form. This author hasfound the form. And yet, here is an obviousjournalistic investigation," – commented hisdecision Omashev. “In our time journalistsused the principle of the pyramid: leisurelystarted, unfolded the story in the middle ofthe article, developed it, and so on. Nowadaysthe inverted pyramid is used, becausepeople have no time. In addition, there is theInternet, TV ... So, to attract the reader, abrief article essence should be presented atthe beginning of the material. Better yet,if the title is "talking." I do not know if theauthor knows this theory of the invertedpyramid, I do not know whether he is ajournalist by training, but the theme standsright," – Professor summed up. The author,who impressed Namazaly Omashev, was thecorrespondent of the newspaper "Aykyn" inAtyrau region, Tursyn Kalimova. Professoralso said that she was able to choose a genrebased on their subject material.If among the materials in the Kazakh languagethe experts singled out the favoritesalmost immediately and unanimously, thenwith the Russian-language works the situationwas ambiguous. A journalist of thenewspaper "Panorama", the former head ofthe press service of Samruk Kazyna Fund,Fatima Kosaeva did not hide her disappointmentabout the contest works.”Oil & Gas ofKazakhstan” magazine disappointed much.I mean, judging by the name it is a specializedpublication, but in terms of the presentationof the material, all three materialsare extremely superficial, with errors." – shesays.Michael Dorofeev, the man known in themedia community of Kazakhstan, took aneven more judgmental position. "I do notknow how to judge the Kazakh press, but regardingRussian, none is worth of the GrandPrix," – he said clearly.The stumbling block was the nomination of"The best material in the national media.""With regard to the materials in Russian,98 № 5 (49), 2011

there is a big problem in the national press.I agree that the level is extremely low. Forsome reason there is not a large number ofpeople, who constantly write on this subjectand whose articles we read. But apparently,they decided not to apply for the contest." –lamented Michael Dorofeev. It became clearthat among those represented at the contest,the standing out were the works by Analystof the Agency for ROI Research, Yuri Tsai,who sent to the jury as much as 19 articles.All noted that Yuri Tsai materials were themost complete. But the question was whetherconsider Yuri Tsai a journalist? Because,the author positioned himself as an expert...As for the regional press, the jury came tothe decision quickly. "I really liked the articleGas prospects in the region by IgorTitenuk ("Kyzylordinskie Vesti, 06/28/2011).We have known this journalist for long. Thisis a very precise and pernickety journalist.We write more about oil, but gas is comingto the fore. From this point of view, I wouldput forward this material. I think this isthe best material in the regional press inRussian," - Michael Dorofeev offered. Havingdiscussed the materials in the regionalmedia, the experts identified several problemsfaced by the journalists in the field. Accordingto a political scientist, Aidos Sarym,regions are more exposed to censorship. Hewas echoed by Michael Dorofeev, remindingthe jury: "We must understand that the regionalnewspaper is entirely a state order atthe local level."But in the nomination of The Best Materialon the History of Oil and Gas Industry theexperts took a unanimous decision. A seriesof essays on the oil industry written by thecorrespondent of Atyrau regional newspaperCaspian commune, Lyubov Monastyrskayawas declared the best. As the Chairman ofthe Committee of Information and Archivesof the Ministry of Communications and Information,Bolat Bersebaev noted, "nowadaysa lot of young guys finish schools andThe Energy ofWord, for thethird year, in orderto attract publicattention to theachievements ofthe national oiland gas industry,to promote theinterest of oil andgas companiesin transparencyand informationopenness.go to work on oil sites, and if they are morelikely to meet with the veterans of the oiland gas industry, more likely to read aboutthem, then the youth will have the right motivation."Summing up the contest, Director of PublicRelations JSC EP KazMunayGas, MichaelDorofeyev noted that according to the winnersit is possible to judge what articles,what topics, what style is popular today; ofcourse, in the opinion of the judges. "I amvery happy that the jury was unanimousin identifying the owner of the Grand Prix.This suggests that the Kazakh press stillhas the journalists ready to objectively approachthe problems in the industry, and atthe same time, present all these problems inthe understandable, high-quality language."– he said.KAZENERGY Association and the NationalCompany KazMunayGas have been conductingthe contest, The Energy of Word, forthe third year, in order to attract public attentionto the achievements of the nationaloil and gas industry, to promote the interestof oil and gas companies in transparencyand information openness. Accordingto Namazaly Omashev, this kind of contestplays an important role for the whole country,because the public needs to know aboutthe existing problems in the industry, aboutthe people committed to their work, aboutthe initiatives that should be proud of. Andonly journalist can inform the community… This year the total number of the materialsexceeded 200, and 8 of them were radioreports, 5 student works, 3 photo reportspublished in the national and regional mediafrom 1 January through 25 September,2011.Results of the III Republicancontest of journalistic mastery,The Energy of Word:The Grand Prix of the Energy of Wordwent to the correspondent of “Aykyn”,Atyrau regional newspaper, TursynKalimova.The Best Article in the RepublicanMedia was awarded to the analyst of theAgency on ROI Research, Yuri Tsai.The Best Article in the RepublicanMedia in the Kazakh Languagewas awarded to the correspondent of“Mangystau” newspaper, AbdygalymSarkenov.The Best Article in the RegionalMedia in the Russian Language wasawarded to the editor of the Economicsdepartment of “Kyzylordinskiye Novosti”newspaper, Igor Titenok.The Best Material on Oil and GasIndustry History was awarded tothe correspondent of “PrikaspiyskayaKommuna” Atyrau regional newspaper,Lubov Monastyrskaya.The Best Radio Program was awardedto the Chief Editor of “Shalkar” program,Kopen Amirbek .The Best Photo Report was awardedto the correspondent of “MunaylyAstana” newspaper, Alma Kalusarieva.The Best Student Work was awardedto the student of Atyrau Oil and GasInstitute, Fellow of KAZENERGYeducational program, DarkhanZhanshin.The recognition gifts were given to:photographer Vadim Soloviev for highprofessionalism and special focus,correspondent of KomsomolskayaPravda, Gulnar Kudebayeva for completedisclosure and style, correspondentof Yegemen Kazakhstan, Atyraunewspaper, Zholdasbek Shopegul fornarrative language.KAZENERGY99

Education for futureRepublican Specialized Physics and Mathematics BoardingSchool for Gifted Students named after O.Zhautykov isknown as a leading educational institution of the Republic ofKazakhstan which provides high quality education.100 № 5 (49), 2011ounded in 1972 as an equivalentto the most prestigiousphysics-mathematics boardingschools of the formerUSSR, the school aimed toreveal and support giftedstudents from all the regionsof the Republic of Kazakhstan.Fby Energy The biggest contribution toFocus the foundation and developmentof the school that iswidely known as Fizmat was made by thebrightest scientists-mathematicians, particularlyby academic O.Zhautykov, afterwhom the school has been named since 1990.The school has successfully overcome difficultiesof transition period, being able tokeep the best traditions of the past, as wellas implement and develop the new ones andthrough that give a positive impulse to educatingthe best representatives of Kazakhstanisociety.More than 6 thousand people were graduatedfrom the school for almost 40 years ofits existence. A large number of the schoolgraduates have become bright politicians,promising scientists and successful businessmen,innovators in their field, excel atpeculiar corporative spirit.Among them: K. Masimov (Prime-Ministerof Kazakhstan), T. Kulibayev,K.Kelimbetov, E.Kaliyev, B.Sultanov,N.Kapparov, E.Dosayev, K.Kozhamzharov,S.Nurgisayev and others. Such people asA.Dzhumadildayev, E.Aryn, F.Kuanganov,I.Beisembetov, A.Kusainov, U.Umirbayev,N.Temirbekov and others have made asignificant input to the development of nationalscience and education. The success ofschool’s graduates seems connected to boththe highest quality of its education and thevast demand for them that come into playafter graduation.New generation of graduates demonstratesthe same level of ambitions and determinationin realizing their full potential. Thevast majority of them have become successfulstudents of the top national and internationaluniversities.

educationEducation:MaximizingKazakhstan'shumanresourcepotentialBen Godwin,the Director ofExternal Relations inCapital Education102 № 5 (49), 2011BEnergyFocusen Godwin, the Directorof External Relationsin Capital Education,is convincedthat the success ofhis firm is based on aprogressive businessmodel operating atthe heart of the newKazakhstan capital.“The right approachto client relations,built on a positive internal atmosphere,enables us to benefit from therapidly-developing economy here inAstana and become a leader in theeducation field.”Ben, what brought you to Kazakhstanand how did you begin work here?As far back as my school days I rememberbeing interested in the historyof the former Soviet Union. Ithen had the opportunity to write myMasters dissertation on the economicdevelopment of Central Asia from1991 under the supervision of professorswho had extensive experiencein the region. This was an extremelybeneficial experience and inspired meto head out to study Russian in theregion after graduation. I also spenta considerable amount of time workingfor a consultancy firm advising financialorganisations on investmentrisk in the region before coming outto work in the European Commissionhere.How did Capital Education come intoexistence?As I was finishing work at the EuropeanCommission I needed to make achoice: return to Europe and pursuea career in an area such as the diplomaticservice or stay in Kazakhstanand try something altogether new.The idea of launching a project in Kazakhstanwas extremely appealingand I was sure that it offered were farmore opportunities to for me develop.More than anything I wanted to workindependently and try something bymyself. This is when I joined my twolocal partners to work on Capital Education.I understand that Capital Educationprovides professional training for largeorganisations. What kinds of servicesdoes this involve?One of our key areas of activity isprofessional training for large organisationsand companies. As Kazakhstan’seconomy matures, companies

equire their staff to have the highestlevel of qualification and are preparedto invest in them. Our servicesgive Kazakhstan specialists accessto leading international consultantsfrom leading universities, businessschools and professional associations.Our considerable network is able tooffer a wide range of spheres includinghuman resource management, oiland gas engineering, management,finance, time management, logisticsand IT.How does your language training differfrom other centres?Despite the large demand Languagetraining in Kazakhstan is still in anearly stage of development. Thereare no major international languageschools and modern teaching methodologyis often little understood. Wehave introduced European standardsto our courses based on the CommonEuropean Framework of Referencefor Languages. We have alsoworked hard to recruit top internationalteachers and develop an internalculture of development, ensuringall have the ability to operate at thehighest level. And in fact our clientshave come to expand such a standardof service from us.Who are the eventual beneficiaries fromyour trainings?We have an extremely wide portfolioof services. We have over 400 clientsbenefitting from our services atany one time, from schoolchildren tomembers of parliament. Some learngeneral or business English, othersare preparing for international exams,while others still are receivingprofessional training within theircompanies and organisations. Ourfull-time trainers are qualified teachersbut have a number of other qualificationsin business, IT, and journalism.One of the key areas that CapitalEducation specialises in is studentrecruitment. Why are Kazakhstancitizens so interested in internationaleducation?I think, in the first instance, it comesfrom the parents. Parents here areprepared to invest huge amountsin their children’s development. Ithink that the parents really understandthat an education from a leadinginternational institution enablesstudents to be competitive in a globalisedeconomy. This is of particularrelevance to Kazakhstan due tothe rapidly growing number of internationalcompanies operating here,whether it be in the energy sphere,mining or retail. People recognise theopportunities that this education canbring them.You chose an original approach topromoting international education inKazakhstan with the Education Lifetelevision project. Could you tell us moreabout it?We have always been interested inlaunching new and creative projects.Education Life is unique in that it isthe only programme on Kazakhstantelevision that looks at the experienceof Kazakhstan students studyingabroad; how they live, the benefitsof their education and what theyhope to achieve in the future. Thefirst series was filmed in the UK inan ‘info-tainment’ format, ensuringit was informative while maintainingentertainment value. It has beenWe have over 400 clientsbenefitting from ourservices at any one time,from schoolchildren tomembers of parliamenta considerable success here and programmescontinue to be made.I hear a lot about the Capital Educationteam. Could you tell us more?Our team is relatively young, particularlyby international standards,but it consists of highly talented andmotivated people. Most of the teamhave received education abroad andare already respected specialists intheir field. We are all creative peopleand have established a very positiveworking environment based on respectand professional development.For example, we provide varioustrainings each week for all on subjectsranging from leadership skillsto organising personal finances. Thismaintains a dynamic atmosphereand encourages a very powerful teamspirit.Without such a strong team we wouldnot have been able to create such aninteresting company and launch somany projects. We have achievedmany firsts in Kazakhstan, such asour television project and have alsoworked hard to modernise and createefficiencies within the educationmarket. For example, we are the firstand only company to send studentsfor education abroad free of charge.There is no reason to charge clientsfor this service but all of our competitorsdo so. Client demands are rapidlychanging as they become moreaware of the possibilities availableto them and the only way to succeedin this kind of market is to be at theforefront of innovation.What other services does CapitalEducation offer?We run education and recruitmentexhibitions in the major cities of Kazakhstansuch as Astana, Almaty,Karaganda and Ust-Kamenogorsk.These events increase awarenessabout the possibilities of internationaleducation and gives young peoplethe opportunity to get a world-classeducation or find a job in an leadingcompany.We also run a scholarship programmewith the U.S. Embassy herein Astana for teenagers from disadvantagedbackgrounds. They receive6-hours free English language traininga week over the course of twoyears as well as careers training andother skills such as public speakingand acting. Upon completion of ourprogramme they will have an excellentchance of receiving a scholarshipat a top U.S. university, completelychanging their outlook on life.What would you say is the principlecause of Capital Education’s success?As I said, I think it comes down to astrong team and the correct approachtowards our work. Kazakhstan is goingthrough a really interesting periodat the moment, where a lot ofyoung, very talented and motivatedpeople are starting to make realchanges to their country. They areambitious, entrepreneurial and keento launch new projects. Being in Astana,Capital Education has really benefittedfrom this trend and is playingit’s own role within it. By giving ourstaff the freedom to develop and pursuenew projects we have establisheda very strong, progressive team. As aforeigner, it is really exciting to be apart of this process.KAZENERGY103

ART kazenergyMangyshlak:on the wavesof three seasby Andrey MikhailovBecause of its aridity Kazakhstanseems much larger than it actually is.But in fact the country is not a dwarf.By area, we are in the ninth place andare between Argentina and Sudan.Such extensiveness implies greatregional differences in different parts.They exist. Our flat north is absolutelydifferent from the mountainous south;the rainy east bears little resemblanceto the desiccated west. The same canbe said about the peoples, tribes,still loosely living in this boundlessspace. But one part of the country,even against this backdrop, can beconsidered the standard of otherness.Mangyshlak is its name…In Mangyshlak, other countries arose nextto me constantly. Unobtrusive parallels andperfectly clear analogy snatched out of memorynow and then things seen somewhereand sometime. But mostly I remember theholy Praying Allahabad, where the streamsof three sacred elements of Indian civilizationmerge into one: the Ganges, Yamunaand Sarasvati.104 № 5 (49), 2011

Here, in Mangyshlak, three powerful universalflows are joined. Three of the seas: Firstis the Caspian Sea, a huge pond with theobscure geographical status and the vaguegeological past.Second is the desert peninsula and adjacentUstyurt, which on closer inspection turnsout to be the sea, too, but punished for something,and sworn in some unthinkable distanttimes, dried, enchanted and petrified,turned inside out. No wonder then, in anyplace, at any height, in any depth one canfind shells, fish or mark or tooth-stone ofsome primitive sharks.And one more sea is a man-made one, which(like the invisible Sarasvati) is glistening inthe dark depths of the human history, butoccasionally bringing to the the surface mysteriouswreckage and exciting signs of of thepast. Someone has once given a faithful andreliable guard to this hidden sea. The de-KAZENERGY105

ART kazenergyBoth in theRussian Empireand the SovietUnion, theCaspian Sea wasconsidered themain barrel of fishof the state. Andit seemed to beinexhaustible.scendants of which are the current Kazakhadays.Cultural and geographical phenomenon,whose name is Mangyshlak, deserves to betreated carefully not talked about in vain.So, let us take the course with the CaspianSea.Shagreen AreaThe Caspian Sea can be attributed with asafe conscience to the most mysterious watersof the earth. Due to the fact that the scientistsstill cannot sort out its geographicalstatus, the Caspian politicians cannot divideit up. If the Caspian Sea is the lake, theyneed to share it equitably, if the lakes ...take it share and share alike!Besides, the Caspian has never had accuratemaps. Had not and will not have. Becauseits mapping is a permanently fatal process.The cup, which laps the Caspian water, hasvery easily expandable coast, on one handand on the other represents the pool constantlyfilled with several pipes (the largestin diameter is the Volga, 75% of debit) withvery unstable pressure.That is why, a priori impossible, for exampleto determine not only the exact coastlines,to catch surfaced (or drowned) island, butalso to establish the area of adjacent administrativeentities, for example of Mangistauregion. When a lot of water (like today) - theland is not enough. When on the contrary,then ... Today, Kazakhstan is growing by itsCaspian lands!I remember the Great Khazaria by Gumilev.And not without reason our archaeologists’conjecture on the fact that in the era of regression(and the fluctuations permanentlyaccompanied the history of the CaspianSea), there was a land bridge from the PeninsulaTub-Karagan to the shores of the Volga.The caravans of ships, but not the sea,land ships walked across this bridge. Camelswith bales "floated" from Central Asia toEastern Europe right on the sea. Like on dryground. Straight through the eye of a needle.In the Mouth of the CaspianBut the cup of the Caspian Sea for manymillennia remains empty. To get the levelof the World Ocean it stably lack 20 to 30meters. Thus, our pool is also deprived of avisible pipe through which pours out. Butif it is just flowed in, then the level wouldgrow125 - 135 centimeters per year and wewould have long had own Atlantis (Caspis)in the form of almost all Atyrau and mostpart of Aktau region. However, this does nothappen. Why?Simply because the Caspian Sea has a trickynatural counter regulator in the form ofshallow East Bay which are filled with thegrowth of its level and work as huge naturalevaporators. Kara-Bogaz-Gol, Dead Kultuk,Kaidak - the greater the level of the CaspianSea, the greater the area of of the evaporatingsurface, the more water turns intosteam. And no need in runoff - the water isabsorbed in the "mouth" at such a rate thatthe first explorers of the Caspian Sea (for example,Karelin in 1856), long thought beforethey went in in their fragile boats.The water evaporates, and what remains?Salt! Salt, which is spread from here acrossthe world. And here, in the Caspian sinceancient times it was used for the good of thecause. For fish salting. The two salt lakesturn pink on the road from Fort-Shevchenkoto Bautino. They say that when people livedhere in another way, this salty fish, notablefor its excellent flavour, shipped from hereeven to the royal table, in St. Petersburg. Itwas the pride!Hole in the fish barrelBoth in the Russian Empire and the SovietUnion, the Caspian Sea was consideredthe main barrel of fish of the state. And itseemed to be inexhaustible. It lasted untilthe 50s of the last century. And, interestinglythe Caspian fish was an exclusive product.Like most other inhabitants of the Caspian,65% of which in 1937 were considered endemic.And 43 of the 73 species of the fish ofthe Caspian had a commercial value.Then the fish began to fade and grow shallow.Initially somewhere gone were beluga,monsters fish, whose viability determined bythe fishermen, sitting astride, to show thatthe feet do not reach the ground. Then othersturgeon slowly began to be lost. Gradually,fishing masters started fishing herring, thensardines, which became the most favoritepeople's snack during the development of socialism.Back in the 1950s the sprat expeditionwent to the sea numbering 160 vessels!But today they are in the past106 № 5 (49), 2011

One of the centers of fishing in the Caspianis located in Bautino in those early times,when Bautin Alexey himself had not yet laiddown his life in a violent battle for the happinessof the working people and a peacefulsettlement of fishermen called the village ofNikolayev.Right there in Tyubkaragan bay, was themain base of the Caspian sea-dogs slaughterhousefor those courageous people whoused to come out with the sticks in wintersto the breeding grounds, and beat the defenseless"Matiukha" with newborns "Belka".They beat to a frazzle, until hands beganfalling off. Seals fight was carried out inthe North Caspian Sea for a century, mainlyin the islands named the Seal islands. Skinswere used in many furriers’ crafts, and fat -in the food industry and as a lubricant.Nikolayev's merchant fishermen (for example,the famous Zachary Dubskoy) wereknown as widely as those Soviet leaders ofcooperatives and state farms, factories andbases who had come to replace them. Thesuccession, despite the social upheaval inthe early XX century, was still preserved.The builders of communism utmost usedthe nationalized means of production of thecapitalists, such as boats, ice-houses, smokefat-melting plants. And they themselves, atfirst differed little from their predecessors.Only fish in the Caspian Sea did not wishto be imbued with the grandeur of the economicplans of the workers' and peasants. Itgrew small and thin.Today, little is reminiscent of the gloriouspast of these fishing areas, except for thoserusty remains of the fishing fleet beautifullyblazing in the turquoise waves of theTyubkaragan bay that serve as the roost forphlegmatic cormorants. Along the shores ofthe Seal islands that is being served as reserve,there are lying... No, not seals! Hugevats used for melting the seal fat.The Caspian “Black Gold”However, some fish in the Caspian Sea isstill alive. Despite the fact that legal fishinghas disappeared from the shores ofMangyshlak, here in Bautino, is a divisionof guard-ships and boats, whose main taskis the fight against poachers. And on Kulaly,the largest island of the Seal archipelago,day and night the land guards of our borderskeep the watch on a single Kazakhstan islandpost.Constantly on duty, there is a dozen of soldierswith a pair of officers. Being replacedthe desertpeninsula andadjacent Ustyurt,which on closerinspection turnsout to be the sea.KAZENERGY107

ART kazenergyBautino hasmore foreignersthan localsliving here. Theyknow the smellof money.every two weeks. The post was establishedseven years ago. Before that there was abase of Dagestan poachers who sailed fromover the sea on their high-speed "Baida", akind of scooters, which hung with a few of"Yamahas" were beyond the reach by ourborder guards. Even today, they appear inour waters now and then; three hours crossingthe Caspian Sea and they can be caughtonly on helicopters. But now our borderguards have something to response with.Regularly, they detain overseas schoonerwith unshaven "fishers of sardines".One Bayda with two motors lies on the shoreof the island Kulaly. They took her last winter.Even though the owner paid the fineslong ago, for some reason he does not hurryto take away his goods. Perhaps, there is noone to hurry? The shady life the Caspian hasa very dim outlines. But the fact that it isquite active and brutal is doubtless. Whenyou play that kind of money, life comes to itsown laws.The money is big. Even at first hands, theprice of one kilo of black caviar is 700 –1000$. When it gets the customer, somewherein Moscow or Paris, this figure growsby an order of magnitude. So the caviarcould be considered “black gold”, but it doesnot. The reason is that much bigger profitcan be obtained from the black oil.And the Blackest “Gold”Many concerned environmentalists perceivea direct relationship between the reductionof production of black caviar and an increasein production of black oil. After all, the CaspianSea is difficult water. It is known thatthe emissions of gaseous hydrocarbons in theCaspian Sea occur even without the humanintervention. Karelin’s expedition scrubbedthe oil off the oars, popped-up from the bottomon the Dead Kultuk. In December 4,1950 the fiery flashes broke from the depthsof the sea with the height of 100 meters! Afterthat an island appeared with the size ofa square kilometer.Very complex is the structure of the watercolumn itself. At the depth of more than 400meters begins the "dead zone" where there isalmost no life due to lack of oxygen, and below650 meters is a layer saturated with hydrogensulfide (as in the neighboring BlackSea), where there is no life at all. It is interestingthat from the surface of the dead waterevery night myriad of tiny copepods riseto the surface. And there, at a depth of 300meters one can see moth larvae. And theyare not simple bodies, but the base of thefood pyramid of the sea. It is clear that sucha subtle and disturbing the natural mechanismof deep-seated, so notorious cause environmentalupheaval. His is troubled much!Nowadays, Bautino has more foreignersthan locals living here. They know the smellof money. The size of investments can bemeasured by the size of huge production inthe Tyubkaragan Mountains, at the otherside of the bay. The roads there are good forthe heavy trucks driven by foreign drivers.They transfer the stone to the barges. Andthis stone is used to construct an artificialisland over the sea to produce the Kashagancrude. Interesting, how many billions of oildollars will be extracted, if the preparationtakes huge money?The author expresses his gratitude to theAkimat of Mangistau region for assistanceand cooperation.108 № 5 (49), 2011

art kazenergyAspirationfor leadershipFrom space our earth looks like a small blue ball, said the firstspaceman, Yuri Gagarin. Amazing how millions of years ago thisfragile planet could become the cradle of lifeMask. Plaster cast. Painting. Tashtyk culture. 3-4 centuries AD. Russia, Siberia, Khakassia.State Historical Museum, Moscow.Photographer Sedenkov I. A110 № 5 (49), 2011

Replacing each other, born the centers of civilization,the ancient people mastered the wood, bone,stone and copper tools, learned how to strikea fire, invented the bow and arrows, weavingmachines, tamed the horse and other animalslearned to plow the ground, created a multifunctional dwelling,the yurt, mastered writing and learned writing and puttingornaments on pottery, created on the rocks their greatworks of art. The planet was changing along with it changedand evolved the human. Some 4000 years ago, and for thehistory it is a moment, the planet was the place for the firsttechnological revolution that is the human inventedthe bronze! Southern Siberia, CentralKazakhstan, the unique Arch are the first ironand steel centres of the earth. "Heavenly Metal"or found an alloy of copper and tin allowedriding a horse hobble, and turn an ordinarysteppe man into the centaur. Mankind has enteredthe era of the iron, the wheel of historyrolled faster.At this time (I thousand BC), in the East, newtribes were forming (see Bichurin N. Ya. [Yakinf],History collection of peoples inhabitedthe Middle Asia in ancient times), empireswere born and died, masterpieces of jewellery were created,the finest silk appeared, beautiful bright fabrics, and at thesame time the struggle for power and territory exacerbateddramatically. China, defending from the countless invasionsof the early Huns nomads, led by the formidable ModeHagan (III-II cc AD) (as Groom Gzhimaylo referred in his"Western Mongolia and Uriankhai edge," Mode in Chinesemeant the transfer of the name Bagatur), built the Greatstone wall, which in our days is clearly visible from space.It is more probable that the Hun tribal alliance was mixed,ethnically heterogeneous: it consisted of Turks, Mongols,Ugric (i.e., ancestors of the Magyars), Khanty and Mansi,and Paleo-Asians. In the "History of the Jin Dynasty," inthe section on the Huns (Huns) from 284 AD, a number oftribes are listed, among which is the tribe named Tu-ge,which was "the most powerful and respected" Scatteredtribes of the Great Steppe: which meant the area of Manchuriaand northern China to the steppes of Kazakhstantoday, after the collapse of the Huns, were united in "dozenof tribes" alliance of Turkic-speaking tribes, which includedKipchaks, Kengerlu, Uighurs, Kalash, Karluk. "When theblue sky was created at the top and the brown earth at thebottom, between both of them there were born the sons ofmankind. Above the sons of mankind, we sat down, the ancestorsof Bumyn Kagan and Istemi Kagan. Having ruledthe kingdom, they guarded the state and established lawsof the Turk people ", so the story about thebeginning of a new era in the desert, the eraof domination of the Turkic tribes, their languagesand the state's largest written monumentto the Turks, a runic inscription in honorof Kyultegin. Thanks to the "high-vehicles" ,carts, as written about them in Chinese chronicles,the technological superiority of the "Altaiblacksmiths' and the use of cataphracts - Platecavalry, nomadic troops and their families itwas possible to manage overcome enormousdistances, wandering to the West. By the way,the scientist Klyashtorny S.G. is convincedthat the term "tele-" is associated with the word "tegreg":Turkic - "cart, wagon." In the last centuries BC and the firstcenturies AD "the tours with fast horses" or, as the fatherof history Herodotus wrote, the "Asian Scythians", the Sarmatians,Saka, Alans, Concarius began assimilating witheach other and settle on the plains of the Eastern Europe.In the academic science this movement of peoples is knownas the Great Migration. But they spoke in genetically relatedlanguages, which are now combined in the Ural-Altaicgroup of languages. The similarity of language, accordingto the chronicle references by Abul-gazy-Bahadur, as wellas researches by Okladnikov, Rudenko, Gumilev, Budbergand Pulliblanc, was reflected to some degree in the similaritybetween the ancient and historical destinies of peoplesgenealogically close-language creators.KAZENERGY111

art kazenergyAnd, like any orderly movement, this lasting historical processat its final stage had its own leader, military leader,Attila (Edil) (434-453 BC). It was him to manage forming aquick, ruthless, skilful, and hard to win Turkic army frommultiple disparate tribal groups, which tried to conquer theRoman west. The Huns conquered the Caucasus, the lowerreaches of the rivers Dnieper, Dniester, Don, the Balkanpeninsula, Mesopotamia, attacked the walls of Constantinople,destroyed the kingdom of Burgundy (an event whichserved as the basic plot, "Song of the Nibelungs"), reachedthe banks of the Danube from there raided the EasternRoman Empire . Byzantium was paying an exorbitant annualtribute. As a Mu’tazilah theologian, Sumam b. Ashras,wrote: 'Turks do not know either flattery or deception, or hypocrisy,or peaching, or pretense, or slander, or duplicity, orarrogance with relatives, or harassment of associates, theyare not susceptible to vice heresy, do not let the whims tooverwhelm them and do not afford to borrow money for theinterpretation of the law. Their drawback and the reasonfor their suffering is the nostalgia, the desire for wandering,the passion for the raids, robberies and strong affectionof their customs." Later, Attila has created a unified statefrom the Volga to the Rhine, which besides the Hun (Altai)tribes consisted of many others, including the Germans, Alans,Slavanians, Ugroins. Priscus, who visited the capitalof Attila as an ambassador, described the Huns in his "Historyof Goths" as follows: "Crossing some rivers, we arrived alarge settlement in which, they said, there were mansions ofAttila, more prominent than in all other places, built of logsand well-planed boards and surrounded by a wooden fenceencircling them not for security, but for beauty. The mansionsof Onogesiya were seen behind the royal mansions,also surrounded by a wooden fence, but it was not decoratedwith towers, just like Attila’s. Inside the fence there weremany buildings, some of whom were from the beautiful adjustedboards, covered with carvings, and others made ofhewn scraped to the straightness of logs that are insertedinto the wooden wheels ...As the squad of theirs consists of various barbarian peoples,then the kinsmen, except for their barbaric language, learnfrom each other both the Hun and the Gothic, and Italic language.Italic comes from frequent communion with Rome.After overcoming some way with the barbarians, we, on theorders of the Scythians, adjoined to us, went to a differentpath, and meanwhile, Attila stopped in some town to marrythe daughter of Eski, though he had many wives: Scythianlaw allows polygamy.Each of those present by the Scythian courtesy rose andgave us a full cup, then embraced then the kissed a drunk,took the cup back».According to the chronicler of Jordan, the tribes which werepart of the "Hun" Union brazenly invaded both western andeastern parts of the Roman Empire and settled in Thrace,Illini, dalmatic, Pannonia, Gaul, and even the Apenninepeninsula. Later, in 455, in the battle of the river in PannoniaNedao the Huns were defeated and went into the BlackSea region: a powerful alliance fell apart. The fact that afterthe death of Attila's empire, many Turkic peoples began toemerge the scene of history under their self-names, says thatbefore, being in the union of Huns, they were "hidden" undera common name, not revealing their identity in the mass ofthe huge union of tribes. Now they are the people, includingthe Kazakhs, playing their own role in the historical action.The fate of many ancient states is cyclic: they all passed theperiod of infancy, the rapid rise and relentless fall. Few ofthem could revive and, like the Phoenix, once again showthe world their strength, beauty and power. Modern peoplesof Dasht-i-Kipchak, within Eurasia remember their cradleAltai; worship Tengri, the God of heaven, who gave theworld metal, keep the priceless centuries-old spiritual heritage.During years of bat, we, the Turks, declare the verseby Magzhan Zhumabayev, in which we ask the destiny togive all suffering that we must pass: «Слышишь, судьба,не хочу подаяний! Полною мерой отмерь мне страданий,В огненном вихре сжигая дотла. Пусть этот вихрь моетело корежит, Испепелит, до золы уничтожит. Так, чтобиз глаз моих соль потекла… Слышишь, судьба, не хочуподаяний! Полною мерой отмерь мне страданий, Жги наогне, в три погибели гни!»Despite the long years of forgetting our own history andculture, we learn and discover new page in the history ofethnic groups and nations that we worship as our ancestors,interpret the fate of the great personalities and rememberthe lessons of history. Perhaps it is no coincidence that thefirst person overcame the gravity from the ancient Land ofBaikonur and flew around the Earth in a spaceship with aunique name of "East".Roza Zhussupova,Honoured Arts Worker of RK112 № 4 (48) 2011

Mask. Plaster cast. Painting. Tashtyk culture. 3-4 centuries AD. Russia, Siberia, Khakassia.Excavations of prof. L.R. Kyzlassov, 1950Khakas national museum of local lore named after L.R. Kyzlassov, Abakan.Photographer Dolinin B.V.KAZENERGY113

sportWindy city ofFire country:Achievementsand Dramaof the WorldCup in BakuTwo silver, two bronze medals and fiveOlympic tickets. This is the result ofperformance of Kazakhstani team inboxing at the main start of the biennium- the World Championship held inBaku. Superiority of the world this yearwas licensed for the Olympic Games inLondon, and therefore brought togetherthe cream of world boxing.Uby TalgatIsenovnfortunately, the winnersof individual championshipof the World Series ofBoxing-WSB, who alreadyqualified for the Olympics(our Kanat Abutalipov wasamong them, acting in theweight category of 56 kg),did not come to the ring ofAzerbaijani capital. But despitetheir absence, it didnot prevent the 16th World Championshipto become a record both in terms of allegedfighters and in terms of participating countries:570 fighters from 113 countries cameto Baku. Nine of our hopes were amongthem: the world champion, bronze medalistBirzhan Zhakipov (49 kg), bronze medalistof Asian Olzhas Sattybayev (52 kg), winnerof the Asian Games Daniyar Eleussinov(60 kg), vice-captain Zhaylauov Ghani (64kg ), two-time world champion Serik Sapiyev(69 kg), multiple winners of Kazakhstanchampionships Danabek Suzhanov (75kg) and Adilbek Niyazymbetov (81 kg), theAsian champion Vassily Levit (91 kg), AsianGames silver medalist Ivan Dychko (over 91kg).114 № 5 (49), 2011

The day before the start of fighting, an extraordinarycongress of the InternationalBoxing Association (AIBA), on which ourcountry was represented by Vice-Presidentsof Boxing Federation of Kazakhstan YuriTskhai and Serik Konakbayev, Chief ofStaff of the Federation Bekzhan Bektenovwas held. The main theme of the meeting -a new program of AIBA – APB launched insummer during the World Junior Championshipin Astana. It will allow boxers to beperformed both at professional and amateurboxing ring, in particular, at the Olympics.Moreover, after London Olympic Games helmetswill be removed from the equipment ofpresent amateur boxers. Thus, if in the pastan athlete had to choose between money andthe Olympics, now he can combine with oneanother.The performance of Kazakhstan nationalteam began with a defeat: one of the mostexperienced team members Birzhan Zhakipovlost in his first battle to Cuban Veitia.However, despite his troubles, our teamscored a good tournament course, and beforethe second round began we did not loseanybody else. In 1 / 16 of finals Irishman MichaelKonlan won Olzhas Sattybayev, thus,our team was left without any lightweightat the World Cup. However, the rest of theKazakh fighters were confident with theirrivals, especially Serik Sapiyev and AdilbekNiyazymbetov. Boxing performance of bothwas very impressing, and if the captain ofthe Kazakh team was accustomed to fightin such a manner even with so promisingfighters like Apichet Saenz, then it was notexpected for the world championships debutantNiyazymbetov to show such a brilliantperformance, although his outstanding potentialis already known. Thus, Adilbek veryeasily and confidently defeated the currentchampion of Asia Hongku Kim from SouthKorea.In 1 / 8 of finals, unfortunately, another Kazakhstanifighter ended his way on the tournament:Daniyar Eleussinov quite unexpectedlylost Hungarian Gil Keith. But the nextbattle was successfully passed by AdilbekNiyazymbetov, which by impressive blow tothe liver knockouted Colombian Varela. Ourheavyweight Ivan Dychko revenged a silvermedalist of the Beijing Olympic GamesZhang Zhiley from China for all the pastwrongs (like the Asian Games final of 2010).In the quarterfinals the bitterness of defeatstrucks another two our fighters - DanabekSuzhanov lost to Brazilian Eskive Falcao,Vasiliy Levit - to Chinese Xuan Xuan Wang.However, Serik Sapieyv, Adilbek Niyazymbetov,Ghani Zhaylauov and Ivan Dychkowon their matches and became winners ofthe World Cup. The latter three fighters becamethe world championship medalists forthe first time in their careers, as for Sapiyevit was the fourth time in a row that he takesthe world championships awards. On thetotal number of finalists, we gave way onlyto the Ukrainian team that had one morefighter.Ghani Zhaylauov, the first of Kazakhstanfighters to protect the honor of our countryin the semifinals, eventually satisfied a"bronze" medal.His opponent - Cuban Yasner Toledo hasproved: it is not in vain that he is a representativeof one of the best schools of boxing inthe world. Ghani was trying to do everythingto win, in the first round struggling withCuban on a collision course, but he missedthree times - 2:6.In the second three minutes Toledo made theresult of battle. Yasner, having caught thewinning wave, coolly made the attack, and,the 16th WorldChampionship tobecome a recordboth in terms ofalleged fightersand in termsof participatingcountries: 570fighters from 113countries came toBaku.KAZENERGY115

sportGhani Zhaylauovthe first ofKazakhstanfighters to protectthe honor ofour country inthe semifinals,eventuallysatisfied a"bronze" medal.116 № 5 (49), 2011more importantly that he counter-attackedvery efficiently and effectively. Zhaylauovmissed quite unnecessary shocks, and afterthe second round the score was already 13:5in favor of Cuban.Tactically "running away" in the thirdround, Yasner scored another eight pointsand finished the match with a score of 21:9.Ivan Dychko also failed to win his opponentin his semi-final - a future world championAzerbaijani Magomedrassul Medzhidov.Ivan won Medzhidov here in Azerbaijan twoyears ago at the "Silk Road" internationaltournament. However, as we know, thereare two big differences between the WT andWC.Thus, only two Kazakhstani fighters SerikSapiyev and Adilbek Niyazymbetov were tosee the decisive battle. The possibilities ofSerik are well known for all of us, but Adilbekbecame the discovery of event in Azerbaijan.Two years ago, being a champion ofKazakhstan, he was in the national team,but the injury of the eye did not allow him toperform at a high level. However, this yearNiyazymbetov although not formally beingthe number one of the team – not being thecurrent champion of the republic - showedgood results and "reanimated" again by amentor of team Aitzhanov got a chance to goto the championship of the world. And he didnot disappoint us. Adilbek showed very confidentboxing, and in the semifinals it wasnot anyone else, but the world championfrom Uzbekistan Elshoda Rassulov to battlewith him.... There are moments when, even withoutbeing on the ring, you feel like a boxer. Allthose Kazakhstani people who were presentduring the match of Serik Sapiev in the hallof Baku Sport Complex felt themselves as inthe ring. They felt the whole spirit of the nationalteam captain. All of his desire to win.And then began to feel the entire defenseobstruction of Ukrainian Taras Shelestyuk.The desire of Serik to change the course ofmatch. Despair, because it does not work.And the bitterness of defeat. He intended totake this "gold" and prove to anybody thathe is worthy of a better again.It must be said: in a match with the CubanJulio La Cruz, our fighter was not "worthy"of defeat with the score that the judges putin the end - 13:17. In our subjective opinion,Adilbek probably did not deserve defeat atall. At the first, the second, and especiallythe third round Niyazymbetov showed boxing,by which he hated rivals in the previousmatches. He worked well with his hands,kept a distance, answered by kicking back,and even yielding the score was able to findthe strength to impose Cuban fighter withhis fight in the final round. But judges recorded4-4 in the first three minutes, 8:4 infavor of La Cruz in the second, and 5:5 inthe latter. Recall that Niyazymbetov is theworld championship debutant, and in thethird round, when many newcomers pass,our fighter, by contrast, seemed preferableto Cuban fighter running from him aroundthe ring. However, the bill will not change,and Niyazymbetov received a silver award,although he could celebrate the championship.The first team place at the World Championshipswas given to Ukrainians that wonfour gold medals. Samostiynaya Ukrainianteam which usually takes only one award ofhigher dignity (for comparison: Kazakhstantook six of them) on the world championships,this time proved that they have notonly Vassily Lomachenko, although at themoment he is the best amateur boxer of theEarth. Of course, an experience of brilliantperformance of the Ukrainian team and thesecrets of their training (the emphasis onpower and endurance components) is worthyof close study. But it does not mean that weshould betray our boxing, for which aggressionand technicality Kazakhs earned the"Asian Cubans" nickname even in the 90s.