Oil and Gas in Kazakhstan
Editorial Overview
Over the last few years, the oil and gas industry in Kazakhstan has advanced greatly in comparison with other sectors. In 2000, oil and gas grew from 6.2% to 10.7% of GDP. Oil production grew from 26.7 to 30.6 million tonnes (i.e. by 14.6%), whereas the production of natural gas grew by 16% and gas condensate by 37.5%.
Tengizchevroil secured its leading position in the oil sector, making up 29.66% of the national oil yield. Other major oil producers are Karachaganak Integrated Company (13%), Uzenmunaygaz (10.17%), Mangistaumunaygaz (11.87%) and Aktobemunaygaz (7.35%).
The share of Kazakhoil, the national oil and gas company, dropped sharply to only 17% in 2000. This was largely due to structural changes within the company.
The number of companies in the oil and gas sector nearly doubled. However, this was not accompanied by a growth in employment; moreover, some decrease in staff numbers of oil and gas companies was seen in 2000.
Oil Export
The export of oil from Kazakhstan has been growing steadily. In 2000, the increase was 2.3 times in monetary terms and 1.4 times in physical weight, which reflects an advance in international oil prices by 1.5 times as an average.
In 2000, the proportion of the oil and gas sector in national exports increased from 33.5% to 46.9%. About a quarter of Kazakh oil and gas condensate exports is being shipped to offshore zones, with the Bermudas and the Virgin Islands being the principal oil and gas condensate importers.
The major exporters of Kazakh oil are Tengizchevroil (44.37%), Karachaganak Integrated Company (16.88%), Kazakhoil (12%), Aktobemunaygaz (10%) and Mangistaumunaygaz (12%).
Investment
Direct foreign investments in Kazakhstan’s oil sector is showing a sustained upward trend. The only exception was the year 1998, which was marked by a recession in investment activity entailed by the low world prices of crude oil. In comparison with 1999, direct foreign investment flow in 2000 grew by 1.4 times. Gross investment in the oil and gas sector also increased considerably, with foreign investment by residents and non-residents accounting for 86.6%.
In 2000, some growth was seen in investment in geological surveys (by $81.3 million). The lion’s share of the total investments in geological exploration was made up by Tengizchevroil and OKIOC.
Oil Prices
International oil prices, despite their fluctuations, have remained fairly high. In early 2000, the difference between the world price and an average contractual price of crude oil in Kazakhstan was 41.8%. However, as state control over transfer pricing strengthened, this difference was reduced to 16.6% by the end of 2000, resulting in greater tax revenue to the Republic’s budget.
Taxes
In 2000, the proportion of the oil and gas industry in the tax revenue structure increased from 9.7% to 15.3%. Total taxes paid by the sector increased by 2.1 times. The largest taxpayers were Tengizchevroil (46.9%), Hurricane Kumkol Munay (18%), Uzen’munaygaz (15%), Aktobemunaygaz (12.8%) and Kazakhoil-Emba (12.8%).
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