Fulfillment of President's instructions: How country's energy security ensured

Today in the Central Communications Service under the President of Kazakhstan, Minister of Energy Bolat Akchulakov spoke about the development of the energy industry of Kazakhstan as part of the instructions of the Head of State, given previously at the expanded session of the Government. Also, the Minister presented the results of the half-year program to increase incomes of the population. 

During the expanded session of the Government, Head of State Tokayev gave a number of specific instructions to ensure energy security of the country.

First, the task has been set to prevent a shortage of diesel fuel by developing differentiated prices for the transit transport and the perimeter of the border.


"According to the border service, about 4.4 thousand cargo vehicles enter the Republic of Kazakhstan per day, about 70% of which are foreign vehicles. Low prices at the gas stations in Kazakhstan lead to an increase in the average monthly consumption of approximately 120 thousand tons. Currently, the Ministry has developed a draft order stipulating differentiated prices for diesel fuel. Prices will be differentiated depending on the residence, the volume of consumption and the type of transport. The work in this direction will continue with the relevant state agencies and parties," Akchulakov explained.  


Second, it was instructed to prevent a shortage of the road bitumen.

According to the Minister, as a result of the work conducted, the import quota for tar sands from Russia increased from 280 to 430 thousand tons, as well as the production of bitumen in the bitumen plant in Aktau, which will allow domestic producers of bitumen to increase production by 300 thousand tons.

As a result, the annual total capacity will be 1.2-1.3 million tons per year, which will cover the needs of the domestic market for road construction.

"I would like to note that the deficit arises due to the uneven selection of the bitumen by road construction companies, in particular in the winter-spring period, there are almost no applications for the production of the bitumen. In this regard, the Ministry together with the Ministry of Industry and Infrastructure Development are working on the issue of determining a single supplier to purchase the bitumen in the winter and spring seasons," Akchulakov said.


Third, the Head of State instructed to elaborate fiscal preferences for the new gas production projects.  

A package of legislative amendments to implement the mechanism of the Improved Model Subsoil Use Contract, including for the gas projects, has been prepared for today. Thus, regulatory and fiscal preferences in the form of tax exemptions are provided.

At the same time, work is underway to develop an incentive gas price for gas projects. Corresponding amendments to the legislation will be adopted by the end of this year.

"These measures will ensure the development of gas fields with total gas reserves of about 93.6 billion m3 (Central Urikhtau, Western Prorva, Anabay, Pridorozhnoye, Teplov-Tokarev group, Ansagan, Rozhkovskoye, etc.) and additional production of commercial gas by 2030 in the amount of 6.7 billion m3 per year," Akchulakov said.  

Forth, it was instructed to take measures to launch trading of liquefied petroleum gas, preventing price distortions.

Thus, in accordance with the President's instruction, the transition to the LPG  exchange was postponed until Jan. 1, 2023. On July 20, 2022, amendments were made to the Standard Rules of exchange trade, which allow avoiding price hikes in exchange trading.

At the same time, the following changes are under consideration:

  • inclusion of LPG in the list of goods that must be accompanied by bills of lading for transportation;
  • tightening of the requirements for issuing fiscal receipts from the automatic gas station with the indication of sales volumes and prices;

The issue of determining a single commodity exchange for scarce commodities, under the control of the relevant government agencies, is also under consideration. The above-mentioned measures will ensure transparency and track transactions in liquefied gas trade.

Fifth, it has been instructed to ensure the commissioning of electricity capacity and the timely implementation of projects to strengthen the electricity networks of the Southern and Western zones of the UES.

Today, 340 MW of electric capacities have been commissioned, and it is planned to commission an additional 240 MW of capacities by the end of this year. At the same time, work is underway to modernize the National Power Grid, including:

- construction and installation work to strengthen the electric networks of the Western power zone. The deadline for completion is 2023;

- a feasibility study is being developed to strengthen the power grids of the Southern power zone. After the development of the feasibility study the parameters and terms of the project implementation will be determined.

"All the tasks set by the Head of State are under the constant control of the Ministry and the tasks will be implemented in accordance with the established deadlines," Akchulakov emphasized.  

As for the measures taken to implement the Program to increase the population's income until 2025, the program includes projects in the oil and gas, gas and energy industries, as well as in the field of renewable energy sources.

"In total, the implementation of 73 projects with the creation of about 34 thousand workplaces is planned until the end of 2025. This year, 14 projects will be implemented and 9.5 thousand workplaces will be created, of which about 6 thousand workplaces have already been created in the first half of the year," Akchulakov informed.  

The deposits of hydrocarbon raw materials necessary for the development of oil and gas chemistry are concentrated in the western part of the country.

Thus, one of the largest polypropylene production facilities in the world (TOP-10) with a capacity of 500 thousand tons/year is planned to be launched in Atyrau region this year. It is planned to receive the 1st batch of products in the 2nd half of this year. It is planned to complete by 2024 the construction of a gas processing plant in the Atyrau region on the basis of raw materials from the Kashagan field with a capacity of 1 billion m3 of raw gas, as well as a plant for the production of methanol in the West Kazakhstan region with a capacity of 130 thousand tons per year.

In addition, the projects for the production of polyethylene with a capacity of 1.2 million tons/year and butadiene with a capacity of 186 thousand tons/year are at different stages of development.

"These projects will attract about $14 billion of investments and create more than 14,000 new workplaces by 2025. According to the results of the first half of this year, 3,240 workplaces were created in the oil and gas industry and 689 more workplaces will be created by the end of the year," Akchulakov said.  

Ten investment projects are being implemented in the gas industry aimed at the construction and modernization of the gas transportation system, supplying gas to CHPPs and settlements, as well as increasing the resource base of marketable gas.

It is planned to complete 2 out of 10 projects this year, 6 projects are under implementation and 2 projects will be launched in 2023. The implementation of these projects will result in the creation of 2,600 new workplaces, including 2,447 temporary and 154 permanent ones. According to the results of the first half of this year, 855 workplaces were created and there are plans to create 141 more workplaces by the end of the year.

It is planned to implement 17 investment projects in the sphere of electric power till 2025 where 6 thousand temporary and 698 permanent workplaces will be created.

According to the Minister, today 12 investment agreements on modernization of existing cogeneration plants are already being implemented, as well as reconstruction of cable networks of Almaty and construction of the second transit circuit between West Kazakhstan and Atyrau regions.

The construction of a combined cycle plant at CHPP-2 in Almaty with a capacity of up to 400 MW is scheduled to begin at the end of this year. In the first half of the year, 905 workplaces have already been created, in the second half of the year it is planned to create 85 workplaces. At the same time, the auction for the construction of combined cycle plants in Kyzylorda and Turkistan regions has been completed.

It should be noted that Kazakhstan, along with the global community, pays great attention to the development of the renewable energy sector in the country. Thus, the program provides for modernization of the energy complex, which involves the launch of 40 projects on renewable energy with the creation of 3.2 thousand workplaces until 2025.

"It is planned to commission 11 RES projects this year, which will create more than 900 new workplaces. Five facilities have already been commissioned so far. This includes 3 solar power plants and 2 wind power plants with creation of 330 workplaces. 577 additional workplaces will be created by the end of the year," Akchulakov said.

The Minister also informed that this year the Karachaganak Expansion Project was launched. As part of this project aimed at maintaining the production shelf, it is planned to create about 2.6 thousand workplaces by 2025. Out of the planned 2 thousand workplaces for the current year, 1.5 thousand workplaces have already been created.

At the Kashagan field, a project on water treatment facility is being implemented. At the same time, to increase the production at Kashagan, the Phase 2A and Phase 2B expansion projects are being considered. These projects will create about 3 thousand workplaces by the end of 2025.

At the same time, 18 contracts were signed for the production and supply of the various types of equipment around major subsoil users (TCO, NCOC, KPO)

In addition, it should be noted that the three companies will create about 2 thousand temporary, after the commissioning of facilities, more than 600 permanent workplaces as part of the construction of social facilities.

According to the minister, KazMunayGas plans to reconstruct and expand the Astrakhan-Mangishlak water pipeline, Phase 1, by 2024, which will create 938 workplaces.

"The construction of a seawater desalination plant in the Mangystau region, Tokymak field, is planned for the period from 2023 to 2024, which will provide 242 new workplaces during construction, and after commissioning, 116 workplaces. A new gas processing plant in Zhanaozen will create 361 workplaces in the period 2022-2024," Akchulakov said.

The Minister of Energy, answering journalists' questions, shared his plans to train specialists of the appropriate level for the operation of nuclear power plants in Kazakhstan. 

"A nuclear power plant is not just equipment that you can buy and install at home, anywhere. It (the plant) must not just be built, the operation of the equipment is one of the most important stages of work. Safe operation is, first of all, personnel. It's people who have to work and understand. Unfortunately, due to the fact that Kazakhstan doesn't have such nuclear power plants, we don't have enough trained personnel. And to operate one plant in dual mode, as we plan, we need about 2,000 permanent personnel," Akchulakov said.

According to him, these specialists must have a special knowledge. 

"These are not just workers, they are employees who have narrow knowledge in nuclear physics, etc. So at some point we're going to negotiate — we're going to have to train our own personnel, and we are already doing that. They have to gain experience. They have to work at the stations for several years. We are doing this, and we think that by the time the plant is completed, we will have a sufficient pool of these specialists who will be able to gain experience over these 7-10 years. But, probably, in the first years of operation it should be done jointly with those who have a lot of experience," the Minister said. 

The Minister of Energy also listed the technology options under consideration by the agency for the construction of nuclear power plants.

"A few words about nuclear power plants. Previously, we said that the process of choosing the right technology was underway. Now one technology has not been chosen yet. We went to Turkey, France, South Korea last year; we went to the UAE. We are planning to visit Hungarian facilities. All the plants are built with different technologies. Turkey uses Russian technology, Rosatom," Akchulakov said.

According to him, a specific choice has not been made yet.

"We need to consider all the pros and cons. There are several options - either the state itself builds, or gives the opportunity to build technology licensees. We are still studying the issues of safety and seismics. Although we have roughly decided on the site - the Ulken village. Before that, there was a short list of five technologies. We decided not to consider U.S. technology, because it is not a benchmark block," the head of Ministry of Energy concluded.

Akchulakov also voiced tentative cost of diesel fuel for agricultural producers by autumn.

"There has never been a shortage of diesel fuel for agricultural producers. I have been working in this field for many years. First of all, we always allocated diesel fuel volumes for spring and autumn works. Moreover, we always made it cheaper by negotiating with resource holders because there is no state subsidy for diesel fuel in our country. This year the price was 212 thousand per ton. In the autumn period we want to set 222 thousand tenge per ton," the Minister of Energy said.

He explained such decision. 

"This is about 180 tenge per liter of diesel fuel for agricultural producers in the amount they are asking for - about 400 thousand tons for the harvesting and sowing. Why? Because the difference is small, you can see that the grain is in price today. We thought that instead of suffering losses from the supply, we can at least raise the price a little," the Minister added.

The Minister of Energy shared his opinion on the available options for gas supply to the northern regions of the country.

"The question of gas supply to the north and the east has been discussed many times. If we want to start this work today, then, accordingly, the best option is to supply gas from Russia. This is the most economically feasible and sustainable option in terms of supplying the gas itself. We are talking with Gazprom at the level of QazaqGaz. We conducted preliminary negotiations at the level of departments, today we're working out technical conditions," Akchulakov said.

According to him, many coal-fired plants will be converted to gas.

"In terms of the volume: the first stage is about 4 billion cubic meters of gas with the possibility of increasing to about 7, let's round it up to 10 billion cubic meters, because most likely we will have to convert many coal plants that are located there to gas. We want the price to be acceptable to our consumers. You know that our prices are highest in the south and in Nur-Sultan. Probably about this level, because it is imported gas. It is still to negotiate and agree," the Minister added.

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