Oil and Gas Industry in Kazakhastan

Kazakhstan is one of Central Asias intimately successful and dynamic economies. much than than blow U.S. companies be operating(a) in this untaught, with subsidiaries, JVs, liasion offices or as contractors. While roughly of them atomic derive 18 found in the dexterity sector, many another(prenominal) of them be service sector firms (e.g. internationalist law firms, accounting firms, Banks give care Citibank, American Express bank etc.). at that place are companies in telecom, sector, consumer goods and others. Kazakhastan provides excellent stage business opportunities in the palm of embrocate and Gas, Power, Telecom, medical checkup instruments, Controlling Pollution, Agro-Machinery, Food, Construction and Mining.Kazakhstan has implemented historic structural reforms during the past few years with an objective to transform its parsimoniousness into a robust, mart-driven business environment. However, some of the issues concering the tuition are- corruptio n, contradictory customs decrees, inconsistency in indication of law, red tapism, work permit limitations for managerial and technical staff, amendments in laws increase regime interference etc. Many of these concerns are on legal innovations, which are aimed at creating changes in prevailing contracts e.g. the organization has tardily adopted legislation giving it pr flattative mightys in both existing and early contracts in the event that shareholders in embrocate colour line of business consortia want to sell shares, even if other componentners relieve oneself a contractual right of archetypal offer. Similarly, the G everyplacenment adopted a telecom regulation that limited external equity in telecom companies to forty-nine portion. (http//www.buyusa.gov/kazakhstan/en/doing_business_kazakhstan.html)Kazakhstan is perceive as an evolving thriftiness surmounting the heritage of the Soviet economy through constant dedication to economical liberalization and uphold ing a link coronation climate through service fitted policy choices and support with the West. The IMF c altogethered Kazakhstans firm macroeconomic stabilization actions appropriate and far-sighted. Of all the ex-Soviet economies, Kazakhstan is rated first in FDI as a serving of gross domestic produce and succeeding(a) only to Hungary in per capita foreign localise investment. Because of its thriving reforms, liberal trade practices, and capability to draw external financing, the economy is booming. Kazakhstan is a signatory to the World Trade Organization.(http//www.kazakhembus.com/Stable_Free_Market_Economy.html)Kazakhstans economy registered a growth rate of 8.5% in 2006. gross domestic product grew by 9.4 part in 2005, by 9.1 portion in 2004, by 9.2 percent in 2003 and by 9.5 percent in 2002. Kazakhstans financial policy has been thoroughly administered. Since 2001, the inflation has been downstairs check and substantially controlled. In 2006, it was 8.6 percent, 7.5 percent in 2005 and during 2001-2003 it was 6.4 percent, 6.6 percent and 6.8 percent respectively. Due to strong macroeconomic show and financial strength, Kazakhstan became the first occasion Soviet country to settle all of its debt to IMF in 2000, seven years ahead schedule. The U.S. Department of Commerce has recognized Kazakhstan as a market economy under U.S. trade law since 2002. This is the result of efficient market economy reforms in the do chief(prenominal)s of currency convertibility, wage rate determination, openness to foreign investment, and g all overnment control over the federal agency of output signal and allocation of mental imagerys.Kazakhstan became the first economy from the ex- Soviet Union to get an investment-grade computer address rating from a leading globular credit rating agency in 2002. Projected external borrowings in 2005 were $41.66 meg. In 2004, Kazakhstans gross foreign borrowings were well-nigh $26.03 trillion. Kazakhstan has been able t o check the ratio of borrowings to Gross internal Produce in recent years. In 2005, pith governmental debt was 8.9 percent of GDP whereas this ratio in 2000 stood at 21.7 percent of GDP.Kazakhstan has copious inseparable wealth with a whole potential value intercommunicate at $8.7 jillion. Specially, Kazakhstans hydrocarbon reserves are marvellous and are expected to be following(a) only to Saudi Arabia and Iraq. Oil and bollix is the virtually important economic sector. Oil exportationings defend pushed the economic victimization and throw off already drawn considerable international investment of over US$ 8 billion since 1993. The Tengiz cover color world, was promoted by the TengizChevrOil a joint surmise company conventional by the Kazak government and Chevron in 1993. Exxon Mobil and LukArco have also joined the venture to further develop the said project. TegizChevrOil is the study foreign venture in Kazakhstan. though Kazakhstans present oil turnout of nearly 1.2 one thousand million barrels/ solar day is comparitively small, oil reserves found seaward in the North Caspian, together with shoreward come outs currently be developed, put it among major oil exporter over the medium term.The numerate output of oil and attack abridgement in the country totaled to 61.9 million tons in the year 2005 registering a growth of 4.3 percent over 2004. full(a) exports of oil and gas condensate were 52.4 million tons per annum in both 2004 and 2005. The total output of natural gas in Kazakhstan in 2005 equaled 14.5 billion cuboidal meters, registering a growth of 25 percent over the same in 2004. Kazakhstan has reserves of rough 4 billion tons of keep back recoverable oil and 3 trillion cubic meters of gas.Industry forecaster consider that think development of oil production, together with the intricacy of new handle, will facilitate the country to generate as much as common chord million barrels per day by the year 2015, elati ng Kazakhstan into the send among the worlds top ten oil-producing countries. Kazakhstans exported oil value at US$17.4 billion in 2005, which constituted 70% of total exports from the country.In Kazakhstan, most important oil and gas handle and their producible oil reserves are Tengiz (7 billion barrels) Karachaganak (8 billion barrels and 1,350 billion cubic meters of natural gas) and Kashagan (7-9 billion barrels). From 2004, the Government of Kazakhstan increase its catch of oil deals by ascending levy of new oil projects. (http//www.kazakhembus.com/Enormous_Energy_Reserves.html)It was in 1899, when oil was first revealed in Atyrau. Since then, the crosstie with the West has been essential to energy resource growth in Kazakhstan. The first oil well, Karachungul well, had a depth of near forty meter and daily produced approximately 150 barrels. Alfred Nobel had developed it in affiliation with Russian industrial companies. This grew to fifteen operating wells 1912, and eac h well generated roughly 306-346 barrels per day usually. The new development also included a transportation system for transporting 5,453 barrels of oil to capital of Azerbaijan per annum through barge. While the appropriate make of Kazakhstans vast oil reserves has been isolated due to dickens world wars, a uprising and the conclusion of the Soviet Union, the creation of deep wells and the growth of transferral solutions have remained fundamental to Kazakhstans energy equation.Apart from the major oil reserves, Karachaganak also has 500 billion cubic meters of natural gas. The potentially biggest recent discovery of major hydrocarbon reserves is the offshore Kashagan structure. The reserves at this site are expected to be three times much than Tengiz. The group, developing this devil thousandsquare mile overindulge fourteen thousand feet below the Caspian sea bed comprises of nine companies BP Amoco, ENI, British Gas, Mobil, Shell, arrive Fina Elf, Phillips, Statoil an d Inpex.The forecasted extractable reserves of oil are projected to be 7.8 billion tons, and those of natural gas 7.1 billions cubic meter. About cardinal percent of these resources are gathered in the western parts of Kazakhstan, and the greater part of the reserves are associated with salt fields and have been found at depths of over 5000 meters.The envisaged reserves of the Kazakhstan part of the Caspian shelf are projected to be around long dozen billion tons of standard enkindle hardly the successful expansion of the Caspian fields necessitates a considerable amount of investment. match to industry experts, the total required investment could be as high as $160 billion, which includes an amount of about $10 billion for the preliminary stage of exploration, including field assessment. As on now, western companies have already pumped in more than US$7 billion.Some limitations to getting investments for discovering the Caspian shelf had been the need of a clarification to th e spot of Caspian Sea. With signing of the agreement between Kazakhstan and Russia to partition off the seafloor of the Caspian along the midline between the two countries, the issue appears to have been resolved. Similar agreements have been signed between Kazakhstan and Azerbaijan, and Azerbaijan and Russia.Envisaged reserves of the Aral washbasin stand for about two billion tons of standard fuel. The high gas and oil prospective and encouraging geographical location in respect of the raw material transportation of groundwater routes makes the Aral basin one of the most significant area with respect to the prospective oil discovery operations.In spite of Kazakhstans considerable oil and gas resources, the production and export of hydrocarbons has been inhibited by Kazakhstans land-locked position and its considerable reliance on domestic and Russias shipping networks for export routes. Kazakhstan is dedicated to the expansion of multiple oil export routes, in order to sustain its impending oil resources of 100-110 billion barrels. A wide-ranging understanding with the national stemma operator, Kaztransoil CJSC can be made in order to gain access to the main pipeline system by agreeing to warhead schedules by the Kazakhstani oil producers.Due to the incompetent capability of the Kazakhstani pipeline system, right to use to the pipeline is established as per the ratio of a particular oil producers contribution in the total quantity of oil to be produced in Kazakhstan in a tending(p) year. Presently, there are only two in service pipelines the Atyrau-Samara pipeline connects Kazakhstan to the Russian export network, while the CPC pipeline (Tengiz-Novorossiisk) connects the Tengiz field with the Russian port of Novorossiisk on the char Sea. Although there are it is for the most part privately owned pipeline but Russia reserves the right to suspend and oblige limitations on the stream of Kazakhstani oil from the Atyrau-Samara pipeline into Russian tra nsportation network. More importantly, Russian organizations usually have precession access to their export terminals. By proper a partner to the international BTC (Baku-Tbilisi-Ceyhan) puddle that have built a 1,730-kilometer export pipeline with an annual capacity of 50 million tones, Kazakhstan can improve the scenario. (http//www.kazakhembus.com/Oil.html)The run of nationals and foreign nationals in Kazakhstan are monitored by the tire Laws, labor relations are monitored by individual employment agreements and, if applicable, corporal labor contracts. Employment agreements must be in writing and must adapt the rules to the minimum standards prescribed by the Labor Law. Companies usually face problems in hiring managerial and technical staff. Further, they even have to achieve permits to get overseas workers.Kazakhstan has delivered quellous economic development for some(prenominal) years, particularly given the increasing importation of the Caspian Basin as a source f or petrochemicals. While the rate of its economic reforms has recently slowed down, Kazakhstans promise to continue and further push the structural transformations aimed at changing its economy into a more market-driven business climate remains of resilient importance. Prospective international investors and exporters will pick to see more repeated and many more success stories in this market in order to invest in the Kazakhstans economy. In spite the several issues that still need to be addressed, in this Central Asian country, an increasing number of the U.S. enterprises is of the opinion that Kazakhstan deserves a serious panorama by the U.S. exporters. More importantly, considering the strategic significance of the country, it is important for them to be here for being competitive in Central Asia.Resourceshttp//www.kazakhembus.com/Oil.htmlhttp//www.allbusiness.com/digging/oil-gas-extraction-crude-petroleum-natural/235547-1.html?yahss=114-2974554-235547http//www.state.gov/r/pa /ei/bgn/5487.htmhttp//www.bakernet.com/NR/rdonlyres/1E007228-ED7E-4475-8ED7-0BDBA7B76FD3/38334/DBIKazakhstanJan2005.pdfhttp//www.buyusa.gov/kazakhstan/en/doing_business_kazakhstan.htmlhttp//www.cioc.com/http//news.bbc.co.uk/1/hi/business/7015361.stm