Oil and gas upstream
According to the reserves audit by the international independent consulting firm DeGolyer & MacNaughton, KMG’s proven plus probable (2P) hydrocarbon reserves were at 635 mln tons of oil equivalent (4,894 mmboe) as of 31 December 2020.
The oil and condensate (1P) reserves-to-production ratio is 16 years, far exceeding the average for the global oil majors (about 12 years). The oil and condensate (2P) reserves-to-production ratio with the 2020 production level factored in is 22 years.
STRATEGIC OBJECTIVES IN ENSURING GROWTH IN RESERVES
- Carry out exploration at the current contract areas using own funds and carry financing
- Carry out further exploration at the operating assets using the Company’s own funds
- Attract strategic partners for joint exploration and development of new fields under carry financing arrangements, specifically, with a focus on deep Paleozoic deposits and offshore fields
- Consider acquiring oil and gas assets in Kazakhstan
KMG’s portfolio consists primarily of mature fields, which prioritises exploration as part of the long-term strategy to maintain stable production levels. This requires a focus on execution and operational excellence, the search for resource replenishment solutions and unlocking new reserves and bringing them online both at new and mature fields, based on the results of further exploration activities.
Additions to oil reserves are expected to be driven through both organic and inorganic growth. Growth in KMG’s reserves will rely on the implementation of exploration projects onshore and within the Kazakhstan sector of the Caspian Sea, and going forward, with further exploration in licenses operated by our subsidiaries. In 2019, KMG’s portfolio was comprised of 16 exploration projects, of which 8 were offshore and 8 onshore.
For the purposes of ensuring implementation of the development strategy, KMG is conducting comprehensive studies of Kazakhstan’s sedimentary basins to assess their oil and gas potential and build a portfolio of promising blocks for subsoil use. In 2020, we completed the models of the South Torgai sedimentary basin, in addition to the earlier completed Pre-Caspian, Ustyurt-Bozashin and Mangyshlak sedimentary basin models. Besides, the structural tectonic model of the Shu-Sarysu sedimentary basin was constructed, efforts to model the sedimentary basin are in progress.
A portfolio of new promising subsoil use projects was built, including 3 projects for inclusion in the National Acreage Management Programme (NAMP). The pool of promising projects was prepared for receiving contracts and conducting state geological surveys in accordance with the Subsoil and Subsoil Use Code.
Within the framework of technical cooperation, over 15 data rooms for potential partners, including Equinor, Tatneft, BP, Chevron, ENI, Lukoil, CNPC, CNOOC, were held. Due to the pandemic, the Data Room were held virtually.
Exploration drilling and testing were also completed in the Urikhtau and Bekturly East areas, which resulted in identification free flow of dry crude oil to surface from the Jurassic sediments. Based on the results of re-interpretation, a great number of facies traps were identified. Exploration works on this area are underway.
Exploration costs (excluding stakes) totalled KZT 25.3 bln in 2020.
Oil transportation by trunk pipelines
Kazakhstan piping infrastructure is owned by JSC KazTransOil, two of its joint ventures (LLP Kazakhstan-China Pipeline and LLP NWPC MunaiTas) and Caspian Pipeline Consortium. Kazakhstan's current pipeline infrastructure demonstrates the potential to increase oil transportation from promising projects.
JSC KazTransOil owns an intricate, 5371,57 km long network of trunk oil pipelines, which connects to almost all of Kazakhstan’s oil fields. The Company transports oil to four of Kazakhstan’s major oil refineries, and exports oil via the Atyrau-Samara pipeline, transships oil to CPC and Atasu-Alashankou export pipelines, offloads oil to tankers in Aktau port and for railway transportation. Oil is transported via trunk pipelines by 36 oil pump stations, 67 oil pre-heaters, oil tank farm which totals up to 1.4 million m3. JSC KazTransOil also operates and maintains trunk oil pipelines of LLP Kazakhstan-China Pipeline, LLP NWPC MunaiTas, Karachaganak Petroleum Operating B.V., JSC Caspian Pipeline Consortium-K, JSC Turgai Petroleum and LLP Magistralny Vodovod.
In 2020, a total of 64 181 thousand tonnes was transported via trunk pipelines (including 42 298 thousand tonnes for JSC KazTransOil).
Oil Transportation by Sea
NMSC Kazmortransflot LLP is the National Sea Carrier. Its assets include:
- merchant fleet – own oil tankers: Astana, Almaty and Aktau, each with a deadweight of 12 thous. tons; and Aframax oil tankers – Alatau and Altai, each with a deadweight of 115 thous. tons
- marine support fleet: 8 barge platforms of KMG series with a capacity of 3,600 tons each
- a fleet to support Tengizchevroil’s Future Growth Project: 3 Caspian-class barges (MCV) – Barys, Berkut and Sunkar with a capacity of 5,200 tonn each, and 3 tugboats – Talas, Emba and Irgiz with a bollard pull of 40 tonnes-force each.
The main current routes for oil transportation by sea:
- Routes in the Caspian Sea waters;
- Routes in the Black Sea and Mediterranean Sea waters.
In 2020, the total volume of oil transportation by sea amounted to 8,990 ths tonnes.
Gas transportation and marketing
KazTransGas JSC (KTG, KMG’s wholly owned subsidiary) is Kazakhstan’s national gas and gas supply operator.
KazTransGas operates the centralised infrastructure for commercial gas transportation via trunk pipelines and gas distribution networks, ensures international transit and sells gas on the domestic and foreign markets, as well as designs, finances, builds and operates gas pipelines and gas storage facilities.
KazTransGas operates the largest trunk gas pipeline network in Kazakhstan with a total length of 19,146 km and an annual capacity of 230 bln m3, as well as gas distribution networks with a length of over 49 thous. km.
KazTransGas operates three underground gas storage facilities (Bozoy, Akyrtobe, and Poltoratskoye) in Kazakhstan with a total working storage capacity of up to 4.6 bln m3. Gas transportation is effected by 40 compressor stations and 232 gas pumping units.
KazTransGas has subsidiaries in Kazakhstan in the following business segments:
- Trunk pipeline gas transportation
– Intergas Central Asia JSC
– Asia Gas Pipeline LLP
– Beineu-Shymkent Gas Pipeline LLP
- Transportation via gas distribution systems
– KazTransGas Aimak JSC
- Gas and condensate production
– Amangeldy Gas LLP
The volume of gas transportation via KMG’s trunk gas pipelines in 2020 amounted to 86,6 bln m3.
Processing and marketing of oil
Within KMG’s asset mix, four refineries in Kazakhstan and two in Romania are responsible for processing liquid hydrocarbons (primarily oil).
Following the completion of the modernisation programme, which has enabled the Company’s oil refineries in Kazakhstan and Romania to achieve higher refining depths, the key objectives for these assets in line with the 2018–2028 Strategy include:
- for Kazakhstan refineries: to ensure adequate liquidity generation through cost optimisation to be able to timely meet liabilities as they fall due
- for Petromidia Refinery: to improve performance by streamlining production processes, including through digitisation and oil product slate optimisation to increase sales margins, and ensure a steady dividend flow to the KMG Corporate Centre.
In 2020, sales of own oil and condensate produced by KMG amounted to 22,012 thous. tonnes, including 15,161 thous. tonnes of oil exports, and 6,851 thous. tonnes of domestic oil supplies.
In 2020, hydrocarbon refining volumes at Kazakhstan refineries (net to KMG) amounted to 12,849 thous. tonnes, or 268 thous. barrels per day.