The Kazakh oil and gas downstream market is expected to register a CAGR of approximately 3.78% during the forecast period, 2020 – 2025. Factors, such as the increasing demand for natural gas and increasing investments in refineries, are expected to boost the demand for the Kazakh oil and gas downstream market during the forecast period. However, Kazakhstan's natural gas requires better refining equipment due to the high value of hydrogen sulfide proportion, likely to restrain the oil and gas downstream market of the country.
- Kazakhstan has only three refineries in the country, in 2019. A plan for a fourth large refinery is underway, which is expected to increase the refinery capacity significantly.
- Sizeable crude oil discoveries have been made, in 2019, in southern Kazakhstan which is expected to have significant reserves and may become an opportunity for the new refineries that are expected to process the crude oil.
- An increase in the demand for natural gas domestically and globally is increasing the size of the market and are expected to be the most prominent driver in the market.
Key Market Trends
Oil Refining Capacity to Witness Significant Growth
- Kazakhstan has three prominent oil refineries - Pavlodar, Atyrau, and Shymkent. The combined refining capacity of all the three plants is expected to be more than 16.5 million tons, in 2018.
- Kazakhstan's primary export oil grade is the Caspian Pipeline Consortium (CPC) Blend. CPC Blend is of light quality with an API of 45.3° and sweet crude (0.56% sulfur) which is of high value for its high yield of gasoline and light distillates. Most of the CPC blend is produced from the Tengiz field.
- In Kazakhstan, the capacity of refineries has increased from 350 Thousand barrels daily (kb/d), in 2015 to 390 kb/d in 2018. The refinery throughput increased by 2.26% from 342 kb/d, in 2017 to 374 kb/d, in 2018.
- Oil consumption in Kazakhstan increased by 22.4%, from 13.7 million metric ton of oil equivalent (Mtoe) in 2017 to 16.7 Mtoe in 2018. The oil production increased to 91.2 million metric ton in 2018, from 87.0 million metric ton in 2017.
- Oil refining capacity is expected to grow slightly in the forecast period due to the expansion of refineries and increase in the demand for refined oil.
Increasing Natural Gas Consumption to Drive the Market
- Natural gas exported by Kazakhstan, by pipeline, increased by 93% from 13.2 billion cubic meters (bcm), in 2017 to 25.6 bcm, in 2018, primarily due increase in demand from Russian Federation and China.
- In Kazakhstan, natural gas production increased, by 4.1%, to 21 million tons of oil equivalent (Mtoe) in 2018 from 20.1 Mtoe in 2017. Consumption of natural gas increases, by 22.4%, to 16.7 million tons of oil equivalent (Mtoe), in 2018, from 13.7 Mtoe in 2017. Increasing demand for gas is boosting the growth in the market.
- Shymkent Oil Refinery is the newest oil refinery in Kazakhstan. In 2018, it provided about 30% of all oil products in Kazakhstan from three refineries. The designed annual capacity of Shymkent Oil Refinery is 5.25 million tons or about 40.65 million barrels of oil.
- Hence, increasing natural gas consumption and production is expected to witness significant growth in the forecast period.
The Kazakh oil and gas downstream market is consolidated. The major companies include National Company JSC (KazMunayGas), PJSC Lukoil Oil Company, PetroKazakhstan Inc., KazTransOil JSC, and Kazakhstan Petrochemical Industries Inc. LLP.
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