Kazakhstan needs to more effectively use its available oil reserves to create and expand high-tech oil refinery industries so as not to depend on oil prices, Murat Abulgazin, the senior analyst at the Kazakh Investment Profitability Research Agency said.
“Deep oil refining and petrochemicals are always economically profitable and are a kind of protection from changes in the raw materials market,” he told Trend in an interview March 16.
The expert added that even with intentions to diversify the economy, the oil and gas industry has been and will remain the most important industry for Kazakhstan, just like the importance of hydrocarbons for humanity.
“Market prices will always fall and rise with various amplitudes, fully reflecting the human or social character – the constant change of moods and emotions,” Abulgazin said.
However, he added, the vital need in this energy resource, as a basic condition for the existence of humanity, will always remain.
Therefore, as Abulgazin said, today, it is important for Kazakhstan to carry out geological exploration to find sources that can be developed and give raw materials in the future
He recalled that earlier, Uzakbai Karabalin, Kazakhstan’s first vice-minister for energy, said the production at the major existing fields – Tengiz and Karachaganak – is expected to fall in 15-20 years, so there is a need to find alternatives to them.
"And this is the need of geological exploration, including the Caspian Basin as part of the so-called Eurasia project," Abulgazin said.
At the same time, he said private investors will unlikely direct huge resources towards geological exploration in Kazakhstan. He added that foreign oil companies that appeared in the post-Soviet area in the 1990s got the resources explored in Soviet times for development, i.e., and made a profit on "ready for use".
Abulgazin said that that the long-term investments in any field have a number of economic and political risks. For example, in Poland and Romania, big US companies spent billions on examining shale deposits. But as a result, they were forced to admit a lack of geological prospects. Shell and Chevron backed off conducting search and development operations in southeastern Ukraine because of current events.
“Therefore, big transnational companies and the countries themselves can agree on long-term investment,” the analyst said. “It is quite logical that the Kazakh government intends to spend large amounts on geological exploration in the coming years.”
Minister of Investment and Development Asset Issekeshev said earlier that Kazakhstan intends to direct more than 3.2 billion tenge (about $17.6 million) from the budget and the National Fund towards geological exploration in 2015. Issekeshev made this statement during a forum entitled "Kazakhstan’s geological exploration: oil and gas in focus".