Implementation of Investment Projects

The investment portfolio is represented by a number of projects both in the Company’s traditional areas (subsoil use, services, oil transportation and refining) and in new areas: oil and gas chemical and low-carbon development projects, including green energy construction projects.

The total value of the investment portfolio for 2023 is KZT 50,461 billion, including KMG’s share of KZT 18,636 billion.

Oil and gas exploration and production

Oil and gas exploration and production projects, both onshore and offshore, account for a significant part of the investment portfolio.

In 2022, in order to improve the investment attractiveness of the oil and gas industry in Kazakhstan, the Government, with the participation of foreign investors and KMG, developed the Enhanced Model Contract (EMC) mechanism, which provides a number of regulatory and fiscal preferences for complex projects that require additional incentives (new complex onshore projects, offshore projects and gas projects). In December 2022, the relevant Package of Amendments to the Subsoil and Subsoil Use Code and the Tax Code was signed by the Head of the Republic of Kazakhstan. These amendments affect a number of KMG’s projects and will enable it to intensify work both on the Caspian Sea shelf and on a number of complex and onshore gas projects.

In 2023, thanks to UMK, work on the complex and capital-intensive Kalamkas Sea – Khazar, Karaton Subsalt and Urikhtau projects was enhanced, and relevant contracts were signed. In 2024, active exploration is planned for the Abai and Al-Farabi offshore projects.

In 2022, Exploration Licences (EL) were obtained for 5 areas (Mugodzhary, Berezovsky, Zharkyn, Bolashak and North Ozen). In 2023, an early seismic survey was carried out as part of the exploration programme ahead of schedule. Field seismic surveys were completed at 3 areas in Mangistau and West Kazakhstan Regions. Field work is being performed at Mugodzhary area (Aktobe Region). The re-processing and re-interpretation of historical profiles for Bolashak area, processing and interpretation of seismic data for North Ozen, Zharkyn and Berezovsky areas are at the completion stage. In 2024–2025, it is planned to complete seismic surveys earlier with subsequent data processing and interpretation in order to reduce geological risks and obtain input data for geological and feasibility assessment.

As part of the Turgai Palaeozoic Project, preparatory work for drilling an exploration well was carried out in 2022–2023. In 2024, drilling of an exploration well to a depth of 5,500 m is planned. Also in 2023, contracts were obtained for Karaton Subsalt and Kalamkas Sea – Khazar subsoil areas, operating companies were established and strategic partners were engaged for each of the projects. At Karaton Subsalt area, the first exploration well is planned to be drilled in 2024 at the expense of the strategic partner, with testing to be completed in 2025. Design work is planned for Kalamkas Sea-Khazar area in 2024.

Pilot operations have been completed under the Eastern Urikhtau and Rozhkovskoye field development projects. The East Urikhtau project started production at the end of November 2023. Under the Rozhkovskoye field development project, well U-21 was brought into production on 22 December 2023.

Drilling of an exploration well at Zhenis prospect in the Kazakhstan sector of the Caspian Sea was completed in 2023. No oil and gas deposits were found as a result of the drilling, therefore a decision was made to stop further exploration at Zhenis area. The risk of non-discovery of oil and gas deposits was realised at the expense of a strategic partner in the project.

Work continues to increase reserves through additional exploration of existing onshore fields. In particular, additional exploration is being carried out at West Karasor field of Embamunaigas JSC. Drilling of 2 appraisal wells and completion of design and survey works for development are planned for 2024.

Tengiz, Kashagan and Karachaganak Megaprojects

KMG participates in projects at major fields: Tengiz (20 %), Kashagan (16.87 %) and Karachaganak (10 %), together with the strategic investors.

The Wellhead Pressure Management / Future Growth Project is being implemented at Tengiz. The project will increase oil production by 12 million tonnes per year. At the end of 2023, the overall progress of work on the project was 99.3 %. Mechanical operations are completed. The Integrated Operations Control Centre was put into operation. The systems have been prepared for operation and commissioning.

On Karachaganak field, the projects are being actively implemented to maintain the production plateau. In 2023, a concept was developed for the construction of a gas processing plant with a capacity of 4 billion m³ of commercial gas per year. Implementation of the project will allow commercialisation of produced raw gas from Karachaganak field and its refined products. In 2024, the 5th Injection Compressor (5IC) Installation Project is scheduled for completion. The 6th Re-Injection Compressor Installation Project is under active construction (43 % of the total work progress).

Oil production at Kashagan field is carried out as past of Phase 1 of the field development. As part of Phase 2 of the field development, projects are currently being considered to increase oil and condensate production levels over the next 10 years to ~710,000 barrels/day (~89.5 thousand tonnes/day).

Oil Transportation

In December 2022, the CPC Oil Pipeline System Bottleneck Elimination Project to increase the capacity of the CPC pipeline to 80 million tonnes per annum ensured readiness to increase oil pumping volumes to 81.5 million tonnes per annum. In 2023, work was completed and the Tengiz and Atyrau OPSs were commissioned.

In 2023, the joint project of KMTF and International Maritime Investments Ltd – Acquisition of 2 oil tankers with deadweight of 8,000 tonnes – was completed. The vessels were built at the Damen shipyard in the Netherlands. The tankers are 140 metres long, 16.7 metres wide, with a draft of 4.2 metres and a speed of 10 knots. They are equipped with advanced control systems, high technical characteristics and modern equipment, which ensures their reliability and efficiency. The tankers meet all international safety standards and environmental requirements. Since 2024, the tankers Taraz and Liwa have been involved in oil transportation on the Aktau-Baku route. These tankers will fully cover Kazakhstan’s obligations to transport 750,000 tonnes of oil per year via the Aktau-Baku route.

Oil Refining and Oil Products Marketing

One of the main tasks for KMG in the coming years is to resolve the issue of supplying the domestic market of Kazakhstan with domestic oil products due to the projected growth in consumption.

The Company has started implementing a set of actions to improve the reliability of equipment at Atyrau Refinery and Pavlodar Oil Chemistry Refinery, allowing the Company to switch to a three-year overhaul period. The Company also plans to increase production of light oil products by refining Tengiz crude oil as part of the Atyrau Refinery’s operational efficiency improvement programme.

To address the problematic issues related to the shortage of bitumen in the domestic market, KMG has started implementing a project to increase the capacity of CASPI BITUM JV LLP for oil refining to 1.5 million tonnes per year with the production of road bitumen up to 750 thousand tonnes per year. The implementation of this project will make it possible to continuously supply bitumen to the country’s road sector from 2025.

The expansion of PetroKazakhstan Oil Products’s capacity continues to be explored. The Pre-Feasibility Study for the project is scheduled to be completed in 2024.

In the direction of oil marketing development, projects implemented by KMG-Aero were included in KMG’s investment portfolio in 2023. The projects envisage investments in the construction and/or update of fuel refuelling complexes at key airports of the country for the storage of Jet A-1, RT/TS-1 fuel and will allow to provide in-wing fuel storage and refuelling services to domestic and foreign airlines without intermediaries.

Oil and Gas Chemistry

In order to diversify its business and expand its product portfolio, KMG has started active work on the creation of an oil and gas chemical cluster in the country, which is a transition to a new stage in the development of the national company. Since December 2022, polypropylene production has been launched at the plant of KPI Inc. with a capacity of up to 500 thousand tonnes of products annually.

In 2023, the plant produced 180 thousand tonnes of polypropylene. ales markets for finished products are Kazakhstan, China, European and CIS countries. To date, production of 6 product grades has been mastered.

To further expand the petrochemical industry, KMG is currently implementing a project with strategic partners such as SIBUR and Sinopec to build a 1,250,000 tonnes per annum polyethylene plant. Design work is currently underway.

Moreover, to provide the necessary resources and infrastructure for the polyethylene production plant, KMG is simultaneously working on the implementation of projects for the construction of a gas separation complex and trunk pipelines (ethane, propane).

The company has decided to study the possibility of constructing a polyethylene terephthalate production plant. PetroChem LLP together with Sinopec started to develop a pre-feasibility study for the project.

Projects aimed at the development of regions of operation and green electricity

Addressing water supply issues in the regions of operations: Reconstruction of the Astrakhan-Mangyshlak Water Main, Construction of a 50,000 m³/day Seawater Desalination Plant in Kenderli.

On 13 December 2023, a ceremony was held in Atyrau Region to launch the Astrakhan – Mangyshlak Water Main after reconstruction and expansion. Alikhan Smailov, the Prime Minister of the Republic of Kazakhstan, launched the work of the facility via teleconference. The project allowed to increase the throughput capacity of the water main from 110 to 170 thousand cubic metres per second.

The Astrakhan-Mangyshlak Water Main is a strategically important facility and is the only centralised source of water supply for consumers in Kurmangazy, Isatay and Zhylyoi Districts of Atyrau Region, as well as for Zhanaozen, Beineu, Mangistau, Karakiya and Tulparagan Districts of Mangistau Region. The population consuming water from it is about one third of the population of Mangistau and Atyrau Regions.

Infrastructure and desalination plant construction contracts have been awarded for the project “Construction of a 50,000 m³/ day Seawater Desalination Plant in Kenderli”. Design documentation for the construction of infrastructure has been developed. At present, survey works and development of design documentation for the plant are underway. The plant design documentation is expected to be finalised in 2024.

Ensuring uninterrupted gas processing, including to cover the gas demand of the region’s population, a project to build a new gas processing plant in Zhanaozen is being implemented.

The EPC contract for the construction of the new gas processing plant in Zhanaozen was signed in November 2023. In February 2024, the EPC-contract entered into legal force. In 2024, it is planned to develop the Detail Design for the plant.

Addressing low-carbon footprint reduction through green electricity generation:

The project “Construction of a 120 MW RES hybrid power plant with Eni S.p.A.” was initiated in spring 2023 together with strategic partner Eni S.p.A. to ensure stable electricity supply for Ozenmunaigas and KazGPZ, as well as to reduce the carbon footprint of the Republic of Kazakhstan. The project involves electricity generation from renewable RES (wind and solar) and a gas-fired power plant. At the moment, the calculation of the wind and solar potential, the project location, and the feasibility assessment of the project have been finalised. In 2024, the construction of the project facilities is expected to start with full operation in 2025.

The project “Construction of a 1GW Onshore Wind Plant Combined with a 300MW/600MWh Energy Storage System in Kazakhstan. The Mirny Project” implemented by KMG together with Samruk-Kazyna and Total Eren, was initiated in the summer 2023. The facility will be constructed in Mirny Village, Moyinkum District, Zhambyl Region. The Mirny project is aimed at large-scale power generation in the southern region of the Republic of Kazakhstan, reducing CO₂ emissions and generating offset units as part of KMG’s Low-Carbon Development Programme. At present, feasibility studies are being conducted, including a study of the wind potential in the region to determine the territory for construction of the wind plant.