WNAM REPORT: In 2024, Kazakhstan’s oil and gas industry marks its 125th anniversary. During this period, the sector has expanded from a handful of wells into a major industry, establishing Kazakhstan as a key geopolitical player, according to a correspondent.
History of Kazakhstan’s oil
The history of Kazakhstan’s oil began in 1899 when exploration started at the Karashungul oil well in Atyrau, where 17 wells were drilled. The first geological surveys began in Iskine in 1892, and by the following year, exploratory drilling had commenced in Dossor, Karaton, Makat, and Karashungul.
In journals of that time, Karashungul oil was described as “very light, transparent, and rich in gases.”
Kazakhstan’s oil gained international recognition in 1911 when a major oil field was discovered at Dossor, developed by British entrepreneurs. The chemical composition of Dossor oil was even better than that of Baku, the oil capital of the Russian Empire at that time.
Following this discovery, companies whose bonds were invested in by British, French, German, and Swiss investors began oil production in Kazakhstan. Companies like the “Western-Ural Oil Society”, “Central Ural-Caspian Society”, and “North Caspian Oil Campaign” started oil development.
The Nobel Company, which was involved in Baku’s oil production, obtained its first oil from the Makat field in 1915. By 1913, around six thousand people were working in the Emba oil fields.
By 1914–1915, oil production in Kazakhstan reached 200,000 tons, matching the output of Baku during those years.
However, the Civil War halted the development of Kazakhstan’s oil industry.
In the mid-1920s, oil extraction began using deep pumps and compressors. Rotary drilling was introduced in the Emba fields, increasing the depth of wells and the pace of drilling operations.
During World War II, Kazakhstan’s oil production increased by 39%. The wartime demand for fuel also spurred the development of the oil extraction industry.
The era of independence
In 1992, Kazakhstan, together with Russia and Oman, established the Caspian Pipeline Consortium (CPC) to transport oil from the Tengiz field to the Black Sea port of Novorossiysk. This decision was an important step toward international integration of the republic’s oil industry.
In the same year, Kazakhstan signed an agreement with the Italian company Agip and the British company British Gas to develop the Karachaganak oil and gas condensate field, demonstrating the country’s readiness to attract foreign investors for the development of its rich resources.
The following years marked significant steps in strengthening Kazakhstan’s position on the global energy scene. In 1993, an agreement was signed with the American company Chevron, known as the “contract of the century.” The importance of this agreement lay in the 40-year-long cooperation, symbolizing international companies’ trust in the country’s investment climate.
Also, in 1993, an International Consortium was created to conduct geological exploration on the Caspian Sea shelf. The participation of global players like British Petroleum, Total, and Shell emphasized the importance of Caspian deposits.
In 1995, President Nursultan Nazarbayev signed a decree “On Oil” which had the force of law and aimed to attract foreign investment to the oil and gas sector. Soon after, the National Oil and Gas Company “Kazakhoil” and the oil transportation company “KazTransOil” were established. The beginning of privatization in 1997 marked a new phase for the oil industry, as foreign companies began acquiring controlling stakes in Kazakh enterprises.
With the advent of the new millennium, Kazakhstan continued to actively develop its oil infrastructure. In 2001, oil began to be pumped into the CPC system, connecting Tengiz with Novorossiysk. This pipeline became one of the main export routes for Kazakh oil.
A major discovery was the Kashagan field in the North Caspian in 2000, one of the largest in the world. Additionally, Kazakhstan established an oil quality bank, enabling the identification of oil batches at all stages of transportation.
Since 2002, state control over oil and gas assets was strengthened with the creation of the National Company “KazMunayGas”. This was an important step towards ensuring energy security and protecting the country’s economic interests.
By the late 2000s, Kazakhstan had solidified its position on the international stage by completing deals to acquire major assets, such as Mangistaumunaigas and Batumi Industrial Holdings, ensuring control over important transportation routes.
In 2018, the modernization of the three largest oil refineries was completed. The modernization began in 2010 and covered the Shymkent, Atyrau, and Pavlodar refineries. As a result of the modernization, gasoline production in Kazakhstan increased by a third, addressing the domestic market’s deficit.
