Overview

In USD Millions; Note: the above statiscs are unofficial estimate based on Kazakhstan customs data and industry sources.

Kazakhstan has the Caspian Sea's largest recoverable crude oil reserves.  The Government of Kazakhstan and foreign investors continue to focus heavily on the hydrocarbons sector, which so far has received approximately 60% of the estimated $76 billion in foreign direct investment in Kazakhstan since 1991, and makes up approximately 53% of its export revenue. Existing oil extraction sites offshore in the North Caspian, combined with onshore fields currently under development, mark Kazakhstan as a potentially major near-term oil exporter.  Over the past seven years, oil production in Kazakhstan has more than doubled to 1.5 million barrels of oil per day (bbl/d) in 2008. Major producers include Tengiz, Karachaganak, CNPC-Aktobemunaigas, Uzenmunaigas, Mangistaumunaigas, and Kumkol, which account for 1 million bbl/d.  Output solely from the country's three major fields, the offshore Kashagan and onshore Karachaganak and Tengiz, is set to grow to 1.7 million bbl/d by 2011 and to 2 million bbl/d by 2015.  Kazakhstan now accommodates significant investment in its vast upstream oil and gas resources and government forecasts predict that oil exports could reach as much as 3.5 million barrels per day in 2015.  Most of this year's production increase will come from the onshore Tengiz and Karachaganak fields.  The huge offshore Kashagan field, with an estimated 7 to 9 billion barrels of recoverable oil, is expected to come on stream by the end of 2012, but first commercial oil production will not exceed 100,000 bpd.  The magnitude of the resource could result in Kazakhstan becoming one of the world's major energy exporters by the end of the next decade. This jump in production has also stimulated planning for processing plants and pipelines to come on-line in time for the start of production.

Best Products and Services

Oil industry sources estimate that Kazakhstan could eventually attract up to $140 billion of foreign investment in its oil infrastructure.  Industry experts and the U.S. Commercial Service in Almaty estimate that the current market for oil and gas field equipment and services will grow to $6.8 billion in 2008, and will continue growing at 15-30% annually over the next three years.  There are opportunities for U.S. companies in virtually every sub sector associated with oil extraction, processing, and transportation.  The best prospects include: geological exploration, geophysics, hydrogeology, drilling, research and data management, laboratory studies, oil spill cleanup technologies, and pipeline equipment and services.

Kazakhstan as yet has no experience in offshore production and operations.  This experience gap offers many opportunities for U.S. service companies in rig work, support infrastructure, and environmentally sensitive technologies.  The Caspian Basin's oil-bearing formations are generally quite deep (15,000 feet), under considerable pressure, and often contain a high degree of sulfur and other contaminants, making special Western-made drilling and processing equipment necessary.

U.S. oil and gas field equipment suppliers have the potential for solid growth over the next decade as new fields are brought on-stream and secondary recovery methods are introduced to existing deposits.  The most promising sub sectors are the following: offshore/onshore oil and gas drilling and production equipment; turbines, compressors and pumps for pipeline applications; measurement and process control equipment for pipeline applications; industrial automation, control and monitoring systems for refineries, gas processing and petrochemical plants, seismic processing and interpretation, petroleum software development, sulfur removal and disposal technologies, well stimulation and field abandonment services.

Plenty of other opportunities exist for U.S. companies producing oil and gas field equipment and machinery such as drilling and wellhead equipment, Christmas trees, valves, pumps, motors, compressors, electrical submersible and jet pumps, underwater repair equipment, and oil spill containment equipment.  Good prospects also exist for U.S. small- and medium-size firms offering downstream engineering and such services as fabrication, welding, engineering services and testing in accordance with API and ASME standards.

Opportunities

The Government of Kazakhstan is pursuing a development program for oil fields in the Caspian Sea that calls for increasing offshore oil production to about 2 million bpd by 2015, and for development of terrestrial infrastructure. The offshore development program also calls for more than one hundred offshore blocks to be privatized through open tenders. These future projects, combined with current production and exploration, should provide opportunities for interested U.S. exporters over the next few decades.