Kazakhstan's Energy Outlook

This paper is based on the Asian Development Bank’s commissioned study of Energy Outlook for Asia and the Pacific. With the updates in some historical data, and additional information, this paper presents the energy outlook for Kazakhstan, and draws policy implications. Primary energy demand of Kazakhstan is projected to increase from 56.7 MTOE in 2005 to 88.9 MTOE in 2030 growing at 1.8% per year. This represents a slower growth rate compared with the projected GDP growth rate of 3.8% during the same time period – reflecting the energy efficiency improvement across the sector. By energy source, coal is expected to maintain the dominant share in primary energy demand at 46.1% in 2030 from 49.7% in 2005. However, its growth is likely to be relatively slow, at 1.5% per year through 2030, as coal will be replaced by natural gas for the industry sector, and will be more efficiently utilized for heat production and power. Natural gas demand will increase at an annual rate of 2.2%, reaching 29.7 MTOE in 2030 from 17.4 MTOE in 2005. Increased production in the western deposits and development of domestic supply infrastructure may spur the growth in natural gas across the sector. Oil demand is projected to increase at 2.1% per year. Upgrades and development of the road infrastructure, the transport sector’s growth will lead to an overall increase in oil demand, accounting for more than 50% of total incremental growth in oil demand. Over the outlook period, Kazakhstan’s oil production is projected to increase from 1.2 million b/d in 2005 to 4.3 million b/d in 2030. This assumes steady production increases from the five major fields, including Tengiz, Karachaganak, Kashagan, Uzen and Aktobe. Natural gas production will nearly double from 23.3 BCM in 2005 to 48 BCM in 2030. The production will mainly increase from the western deposits, from the Karachaganak field of which proven reserves account for more than 70% of the entire natural gas reserves in Kazakhstan. Coal production is projected to increase from 38 MTOE in 2005 to 47 MTOE in 2030. About 87% of total production will be domestically consumed in 2030, while the remainder will be exported to Russia and Ukraine. Kazakhstan would have to invest about between $121 billion (low case) and $169 billion (high case) for developing energy infrastructure necessary to meet demand growth as well as to meet production increases. These include upstream, middle stream and downstream investments for oil and natural gas, which respective investment requirements represent $52.9 billion (oil) and $39.7 billion (natural gas) in high cases. Investment for the power sector – including generation, transmission and distribution - would represent $50.3 billion (high case), and the coal sector would require $26.4 billion (high case).