International cooperation

Проекты по транспортировке

1. «Kazakhstan-China» pipeline construction

Atassu-Alashankou pipeline construction in 2005 was called project of the century. The ordering customer and the owner of the pipeline was «Kazakhstan-China pipeline» company established by «KazTransOil» JSC and CNPC.

The length of the pipeline is about 962,2, km, of which 960 km go on the territory of RK and 2,2, km go on the territory of China. The flow capacity at the first phase makes up 10 million tons per year with subsequent expansion to 20 million tons per year. The total investments volume is 806 million USD.

Today, taking into account successful construction experience of «Atassu-Alashankou» pipeline, Kazakhstan and China intend to work out and implement new break-through projects.

The long-terms cooperation intentions of both countries were fixed in the « Agreement on underlying principles of construction of the second phase of Kazakhstan –China pipeline between NC «KazMunayGas» JS and China National Petroleum Company».

This document was evidence of special interest of Astana and Beijing in active bilateral cooperation.

Thus, the second phase of Kazakhstan-China pipeline includes a number of joint projects:

• Kenkiyak-Kumkol pipeline construction;
• Pipeline reconstruction in the area Kumkol-Karakoin-Atasu by «KazTransOil». In case of its technical or economical inefficiency , new pipeline construction is to be implemented;
• Implementation of the second phase of Atasu-Alashankou construction;
• Kenkiyak-Atyrau pipeline reconstruction.

The Parties are planning to complete construction of the Kenkiyak-Kumkol pipeline and Kumkol-Atassu by October 1, 2009.
Kazakhstan is planning the construction of Kenkiyak-Kumkol, which will be the final stage in joining the existing pipelines Kenkiyak-Atyrau, Kumkol-Atassu, Atassu-Alashankou and creating an integrated energy transport corridor which will enable to transport oil from the fields of Western and Central Kazakhstan in the direction of China.

«Kazakhstan-China gas pipeline construction» project

Kazakhstan-China pipeline construction project is implemented in accordance with the Agreement between the Government of Kazakhstan and the Government of People’s Republic of China on cooperation in construction and exploitation of Kazakhstan-China pipeline of 18.08.2007.

The project is aimed at the transit of Turkmen gas via the territory of Uzbekistan and Kazakhstan to China, and export of Kazakhstan gas which will enable to diversify export routes and provide southern regions with their own gas, thus increasing energy security of the country.

Construction of the first section of «Kazakhstan-China» pipeline is implemented by Consultant Engineering Company «Asian gas pipeline» Ltd, established on February 15 2008, on the parity basis by «KazTransGas» JSC and «Trans-Asia Gas pipeline Limited «(CNPC affiliated company).

The construction of the gas pipeline started on July 9, 2008. The first phase was completed ahead of schedule, in record-breaking time. More than 4 thousand people were involved in the construction. On December 12, 2009 President of Kazakhstan Nursultan Nazarbayev and Head of People’s Republic of China Hu Jintao launched the first line of the First section of the main pipeline Kazakhstan-China, whose length is 1308 km.

By the end of the year 2012, the flow capacity of the gas pipeline is planned to be increased to 30 bln cubic meters a year. Further development of the gas pipeline to 40 bln cubic meters a year will take place as part of the "Construction of the «Beineu – Shymkent gas main pipeline» project.

2. Construction of the second section of the Kazakhstan-China gas pipeline (Beineu – Shymkent)

The Beineu - Shymkent gas main construction project is implemented to serve a stable source of gas supply to the southern regions of Kazakhstan, exclude reliance on imported gas and to ensure power stability and security of the country, as is pointed out in N. Nazarbayev’s Address to the People of the Republic of Kazakhstan on 06/02/2008.

The route of the gas pipeline goes through the territory of Mangystau, Aktyubinsk, Kyzylorda and South-Kazakhstan regions and has the following main technical specifications: annual flow capacity– 5 bln cubic meters (within the years 2010 - 2013), 10 bln cubic meters ( in the 2014-2019 years ), total length - 1487 km, diameter 1000mm (1 line). The consortium of design institutes KING JSC – limited partnership KATEK, contracted on the funds assigned from the republican budget, completed development of the project documentation and budget estimate («Project» stage) which received approval ( no. 01-377/09 , 14/08/2009) from the project leading team «Gosekspertiza» .

The following agreements were signed for successful execution of the projects:

• On April, 16, 2009 in the course of the state visit of the Head of State N. Nazarbayev to the People's Republic of China a general agreement between NK «KazMunayGas» JSC ( further - KMG ) and the Chinese National Oil and Gas Corporation ( further – CNOC) was signed. The sides agree to extend co-operation in the oil and gas industry sector; the Chinese side agreed to aid in obtaining a loan of 5 bln USD, of which 3 bln USD is set aside for the gas pipeline «Beineu – Shymkent» construction project;
• On October, 14, 2009, Protocol for the Interstate Agreement «Making Amendments to the Agreement between the Governments of the Republic of Kazakhstan and the People’s Republic of China for co-operation in construction and operation of the Kazakhstan-China gas pipeline of August 18, 2007» in which the Sides undertook to form the capital of the created joint venture, each side's contribution set to 500 million USD as a single contribution;
• A protocol of a meeting between the representatives of KMG and CNOC detailing terms of formation of the venture on October, 14 , 2009;
• A Memorandum of Understanding regarding financing of the second leg of the gas pipeline Kazakhstan – China between KMG and CNPC;
• Agreement on the main principles for financing, construction and operation of the second leg of the gas pipeline Kazakhstan-China between the JSC "National Company KazMunayGas" and the Chinese National Oil and Gas Corporation on June 12, 2010.

This project is scheduled to commence in 2010.

3. Caspian gas pipeline construction project

The project was implemented on the basis of:

• Joint declaration of the Presidents of the Republic of Kazakhstan, Russian Federation and Turkmenistan of May 12, 2007;
• Agreement between the Government of the Republic of Kazakhstan and the Governments of the Russian Federation and Turkmenistan (further - the Agreement) about cooperative construction of Prikaspiysky pipeline of December 20, 2007, ratified on May 14, 2009.

In order to implement the project, On September 11 2008, in Ashkhabad, NC «KazMunayGas» JSC, «GazProm» JSC and «Turkmengas» signed an Agreement on underlying principles of cooperation in construction of Prikaspiysky pipeline.

The pipeline is supposed to be 1 217 km long and go through the territory of the Republic of Kazakhstan to deliver Kazakhstan gas to foreign markets and transit Turkmen gas in the total volume of 20 bln cm annually, inclusive of 10 bln cm of Kazakhstan gas and 10 bln cm of Turkmenistan gas. The pipeline is planned to start from compressor station «Belek» (Turkmenistan) to gas pumping station «Aleksandrov Gai» (Russia, factoring in reconstruction of existing pipelines «Okarem-Beineu» and «Central Asia –Center».

Optimal parameters of the new pipeline (pipeline cost, pressure, and diameter) will be defined based on the results of end –to-end hydraulic calculation, feasibility study on the RoK territory, summarized feasibility study of the Parties.

Upstream projects

1. «Zhambyl» project

In accordance with the commission of President of RK N.A. Nazarbayev, NC «KazMunayGas» JSC together with Korean Consortium are developing bilateral cooperation. During 2005-2007, NC «KazMunayGas» and Korean Consortium prepared the Contract draft on exploration of hydrocarbon raw at «Zhambyl» field. At present, they have completed negotiations with Korean Consortium on approving agreements drafts regulating joint activity of the Parties under «Zhambyl» project and package of documents connected with future concession of partnership share.

2. Satpayev project

The 5-th meeting of Kazakhstan-Indian inter-governmental commission on trade –economic, scientific and technical, industrial and cultural agreement which took place on February 18, 2005, resulted in signing of Memorandum of Understanding between NC «KazMunayGas» JSC and Indian company «ONGC Videsh Limited» in the sphere of exploration and development of the Caspian sea shelf.

Following the Memorandum with «ONGC Videsh Limited», they held joint exploration work which defined «Satpayev» field as the most prospective for further joint activity.

«Satpayev» field is located in the Northern part of Kazakhstan sector of the Caspian Sea, 90 km away from the coast.

On January 2009, during RK President’s visit to India, «KazMunayGas» and Indian company «OMEL» signed an Agreement on principle s of cooperation at «Satpayev» field. The Agreement covered the main commercial terms of future implementation of «Satpayev» project.

Also in 2009, «KazMunayGas» held direct negotiations with the Ministry of Energy and Mineral resources of the RoK (the MEMR) which resulted in the MEMR’s decision to grant the right for subsoil management of the Satpayev field to KazMunayGas on the terms of exploration and production.

In June 2010, Ministry of oil and gas of RK and KMG signed an Agreement on exploration and production at the Satpayev field (of June 2010, N 3575)

At the same time NC «KazMunayGas» JSC is holding commercial negotiations with the Indian party on approval of the package of documents on the deal which consists in concession of 25% share in Satpayev project to the Indian Party and creation of an operating company on the project.

3. Darkhan project

NC «KazMunayGas» JSC and China Consortium comprised of CNOOC and CNPC signed Memorandum on understanding on Darkhan project in 2005.

In terms of the above Memorandum, the parties signed a number of agreements, which brought about joint exploration of geological and geophysical properties in order to define potential productiveness of «Darkhan» site.

By now, the Parties have discussed main commercial, technical and economic conditions of the project implementation and working at the Draft of Agreement on cooperation principles on «Darkhan» project.

Projects in the sphere of petrochemistry and oil refinery

1. Reconstruction and modernization of «PetroKazakhstan Oil Products» refinery

In 2009 Honeywell – UOP (the YSA) developed a feasibility study of the project.

Reconstruction and modernization of «PetroKazakhstan Oil» refinery involves recovery of the expected refining capacity to 6 million tons per year, increase of development of light petroleum products, increase of oil conversion depth to 90 %, upgrading motor fuels quality to EURO-4 standards.

The construction completion date 2014.

At present the project is on the stage of design estimates development.

2. Modernization and reconstruction of Pavlodar refinery

«KazMunayGas» JSC and Italian Company «Eni s.p.a.» signed Memorandum on Cooperation and Understanding concerning investments in oil and gas exploration and in industrial infrastructure objects in the Republic of Kazakhstan. The framework of Memorandum involved development Program for «Pavlodar» refinery for the years 2010-2014. They are developing preliminary design estimates, detailed design estimates and general plan of the plant modernization.

It is planned to recover the designed capacity of the plant to 7,5 million tons per year, increase development of light petroleum products and increase oil conversion depth to 90% and upgrade motor fuels to EURO-4 standards.

The construction completion date is 2014.

3. Aromatics plant construction project at Atyrau refinery

Design estimates and feasibility study of the project developed on the basis of the licensor’s (Axens, France) processes technology are developed and approved by the State expertise. The construction sites are prepared.

October 29, 2009 saw signing of the turnkey construction contract with a strategic partner Sinopec Engineering (China).

The project implementation will allow to increase production volume of high octane motor fuels, improve the quality of fuels to Euro-3 standards and organize production of benzol and paraxylene as basic petrochemical raw for RK oil industry.

The construction completion date is 2013.

4. Oil deep conversion complex construction at Atyrau refinery

Design estimates and feasibility study of the project were and approved by the State Expertise (The project feasibility study was developed by «IC «Kazgiproneftetrans» Ltd and «Axens»). There were held public hearings regarding estimated air pollution.

«Omskneftchimproekt» JSC is developing design estimates.

The project implementation will allow to increase balanced oil refinery production volume to 5,0 million tons per year, increase development of light petroleum products, oil conversion depth to 86%, improve the quality of motor fuels to EURO-4 standards.

The construction completion date is 2014.

5. Paving bitumen production at Aktau plant of plastic masses

The project implementation will enable annual production of 420 thousand tons of paving bitumen suitable for climate conditions of Kazakhstan.

In 2009, NC «KazMunayGas» JSC will purchase 50% share portfolio of ««Kazakhstan Petrochemical Industries» (hereinafter – KPI JSC) from «SAT&Company» Ltd. whose assets include Atyrau plant of plastic masses. In 2009, «CITIC Group» ( China) and KPI JSC signed an Agreement on underlying principles of creation and participation in the joint venture with a view of construction and management of bitumen plant.

Joint-Venture «CASPI BITUM» Ltd (Aktau) has undergone state registration. The founders of the company are KPI JSC and «CITIC Kazakhstan» (subsidiary of «CITIC Group»). Now, they are organizing the projects’ funding and choosing general contractor.

The project completion date is 2011.