KPO is ready to build gas refining plant before schedule

According to the Ministry of Energy of Kazakhstan, a new natural gas reprocessing plant near the Karachaganak field will start operations in 2028.

«Under the road map approved by Karachaganak Petroleum Operating B.V. (KPO) and PSA, which is an official representative of the country’s government, the new gas refinery is expected to be built in six to seven years and enter into operation in 2030. However, if all key decisions are made this year, KPO will do its best and complete the construction by 2028,» the cabinet said in a statement about a new comprehensive plan for the development of oil and gas projects in 2023-2027.

By now, Kazakhstan has to send its natural gas from Karachaganak (about nine billion cubic meters of gas) to the Orenburg Gas Processing Plant before it goes to the domestic market. At the same time, KPO says that it can beef up its gas output from 9 billion to 13 billion cubic meters of gas per year and support this level until the production-sharing agreement expires.

With this in mind, KPO in conjunction with PSA is planning to build a new gas refinery by 2028. Prior to this, the company is going to drill new gas wells and build new gas pipelines. In addition, KPO said that it will modify its facilities at the Karachaganak Processing Complex, launch a new gas treatment facility and build new export pipelines. All these facilities are expected to be fully operational before 2028.

So far, there are 104 companies that operate 295 oil and gas fields in Kazakhstan, although the largest fields of Tengiz, Karachaganak and Kashagan account for 60% of oil and gas production in the country.

Under the plan of extension, KPO has been implementing Plateau Extension Projects and the Karachaganak Expansion Project Phase 1 (KEP1A and KEP1B). All these projects, which are expected to be completed by 2025, are aimed at supporting the current oil output of 11 million tons per year.

For instance, the KEP1A project focuses on increasing the annual daily average volume of gas re-injected into the reservoir and improving reservoir pressure support with the help of a fifth gas reinjection compressor. This project has been implemented since 2020 and cost $970 million. So far, $461.3 million were spent and the project is 67.6% completed.

The KEP1B project is also aimed at supporting the current output and includes the construction of a sixth gas reinjection compressor. The project is worth $734.6 million and has been implemented since 2022 with a completion date of 2028.

On April 11, Minister of Energy of Kazakhstan Almasadam Satkaliyev said that the PSA company, which is an authorized entity to represent the interests of the government of Kazakhstan, has filed lawsuits against Kashagan and Karachaganak for $13 billion and $3.5 billion, respectively. If the country’s authorities succeed, the government will get more revenue under the production-sharing agreement, which is going to last until 2038.

The Karachaganak oil and gas field was discovered in 1979. This is one of the biggest gas condensate deposits in the world. The five majority stakeholders of the project – Eni S.p.A. (29.25%), Shell Plc (29.25%), Chevron (18%), Lukoil (13.5%) and KazMunayGas (10%) – have invested more than $29.8 billion into the project.