Stepping up to meet the growing demand for energy

As an example, Kulibayev cited a growing convergence of interests within the Organization of Petroleum Exporting Countries, whose members represent many of the world’s biggest oil exporters. He said that as many OPEC states have curtailed production, Kazakhstan has increased production and now accounts for 1.3 percent of the total volume of global production, with annual output rising from 40 million to 80 million tons.

‘‘The level of supply experienced growth even during the crisis, and since the beginning of the current year has risen by 7.8 percent,’’ said Kulibayev. ‘‘Kazakhstan will increase its oil extraction up to 1.5 million to 2 million barrels per day over the next quarter century.’’

He emphasized the common ground among Kazakhstan and other producing countries. ‘‘OPEC, the largest world oil club, controlling 40 percent of global production, and the major oil power of the Caspian region, which accounts for 70 percent of regional production, have similar objectives and priorities,’’ he said.

He emphasized that Prime Minister Karim Massimov has said that the sprawling, natural resource- rich Central Asian state places a priority on the security, reliability and sustainability of energy supplies, similar to the stated goals of OPEC members.

‘‘The common objective of OPEC as a traditional source of oil and Kazakhstan as a new hub of supplies is to ensure adequate oil prices to enable future investment in a highly capital-intensive and long-term industry,’’ he explained.

He said he did not believe financial speculators were responsible for the rise in oil prices. ‘‘It is wrong to think that an increase of oil prices is a result of market speculators’ activity. In my opinion, oil as a commodity is fundamentally and artificially underpriced in the market. If revenues of oil companies and producing countries are insufficient, it will lead to lower investment that would result in reduced production and the emergence of a fuel crisis that would be more dangerous for the world economy than the recent financial one.’’

Kazakhstan, he said, possesses ‘‘a giant production-capacity potential. The world’s proven oil reserves increased by 12 percent during the last 10 years, while here they increased from 2.9 billion to 4.7 billion tons, or by 62 percent. Ultimately, they may be as large as 22.5 billion tons.’’

Total investments in the Kazakh oil sector were almost $104 billion during the last 15 years. Expected capital expenditure for the giant Kashagan offshore oil field alone is likely to be more than $130 billion.

‘‘It is the largest, but only one of 15 projects off the Caspian Sea shelf of Kazakhstan,’’ noted Kulibayev, ‘‘and there are multibillion-dollar plans to expand the giant Tengiz and Karachaganak onshore fields. The implementation of these plans will allow Kazakhstan to export up to 100 million tons of oil annually in the next decade.’’

Traditionally, Europe consumes most of Kazakhstan’s oil, with sales to that region comprising more than 80 percent of the total volume of hydrocarbon exports, and Kazakhstan’s share in Europe’s energy balance increases constantly, according to Kulibayev.

‘‘We intend to increase exports to Europe from 70 million tons in 2010 to 140 million to 150 million tons in 2025, using expanded capacity of the Caspian Pipeline Consortium to the Black Sea through Russia and a new tanker-based Caspian Transportation System to carry oil to Baku in Azerbaijan, where it will enter the Baku-Tbilisi-Ceyhan pipeline system to Turkey.’’

Kazakhstan also intends to open up new markets, especially neighboring China. A pipeline linking Kazakh oil fields to western China is already operating, and Kulibayev predicts Kazakhstan will triple its supplies of oil to China in the middle of the next decade. He noted that the trans-Asian naturalgas pipeline to China also crosses Kazakh territory: ‘‘Nowadays Kazakhstan ensures the transit of gas through it, but in the next decade we expect to export our own gas through that pipeline. The Chinese market is a strategic objective of Kazakhstan.’’

He said Kazakhstan has avoided the extreme actions some countries have taken against oil investors: ‘‘Mutual understanding by foreign investors and national forces is one of the preconditions for the stable development of the global oil sector. Kazakhstan has avoided a confrontation between foreign and national participants, with the KazEnergy Association playing a crucial role as an interlocutor.

‘‘The association is a Kazakhstan model of international cooperation of states and businesses with market participants representing different countries to foster global energy progress. No other countries have unions similar to KazEnergy, considering the sphere of objectives and instruments for achieving them.’’

He said that world interest in Kazakhstan was based not only on the fact that the country has one of the highest global figures of oil-production growth, almost 8 percent annually, but was also due to the more than 400 contracts for subsoil use, the presence of investors representing more than 30 countries and the fact that it has succeeded in opening new markets.

Over the next decade, the tempo of development will increase. The Caspian Pipeline Consortium system’s capacity will be more than doubled, to 67 million tons per year; the new Caspian Transportation System export route (56 million tons) will be established; work on the second phase of the China gas pipeline will begin; and there will be large-scale exploitation of Caspian offshore resources and the creation of a modern refining and petrochemical industry.

Kulibayev concluded: ‘‘We think it is right to interact with OPEC concerning issues of global oil trading, with the Organization for Security and Cooperation in Europe concerning the ensuring of global energy security, with the World Petroleum Council and the World Energy Council to develop international energy cooperation and mutual understanding. But a major factor of the oil politics of Kazakhstan is independence. It will further define the strategic course of our state in the future.’’

Source: ROBERT CORZINE, The International Herald Tribune