“Kazakhstan’s role in energy sector of China is increasing”


Mr Bo Quilian, President of PetroKazakhstan, answers the questions of the Munaishy magazine

What is Kazakhstan’s role in China’s energy balance, and in your opinion, how will things develop in the future in this respect?

Kazakhstan and China have been developing successful business cooperation in the past few years on the basis of strategic partnership between the two countries. Kazakhstan plays an increasing role in China’s energy cooperation. But there is still opportunity for growth. I would like to provide you with some statistics. The actual crude oil consumption in China amounted to 345.9 million tons in Y2007, but only 5.33 million tons was imported from Kazakhstan which (is 1.54%). It is expected that crude oil export from Kazakhstan to China will further increase with the completion of the second phase of Kazakhstan-China Pipeline.

How do you evaluate CNPC’s current position in Kazakhstan’s oil and gas market? Are there plans to expand the company’s activities?

For more than ten years of business development in Kazakhstan, CNPC has been actively involved in all kinds of petroleum operations in the country, including geological exploration, production, refining, transportation, and marketing. The company has also become one of leaders in the region in terms of investment and contributions to the economy and social infrastructure.

Good business expansion opportunities are always attractive to investors. As a responsible corporate citizen, CNPC always takes serious consideration of social responsibilities in decision making to expand its activities. Therefore, CNPC will take every opportunity to expand the company’s activities for the best interests of the company and the economic development of the Republic of Kazakhstan.

At present Kazakhstan’s regulatory bodies pay a lot of attention to the ecological issues, in particular, prohibiting gas flaring. As you know, almost all volumes of gas were flared in Kumkol before CNPC’s arrival. How did you manage to resolve the issue?

Protection of the environment is a top priority for CNPC in conducting petroleum operations both in China and internationally. That explains the company’s guiding principle: “Providing Energy and Creating Harmony”. Therefore, CNPC has been taking the issue of gas flaring seriously since the company started its operations in Kazakhstan.

After the acquisition of PetroKazakhstan’ assets in October 2005, the company spent more than $150 million on gas utilization projects and dismantled 112 out of 131 (by the end of Y2008 expected all 131) of the small flares in single well facilities in Kumkol group of oilfields. PKKR is now re-injecting gas into the gas cap in Kumkol and KAM fields which helps increase oil recovery and improves the environment. Besides, the associated gas produced in South Kumkol field, is being utilized for power generation in a gas turbine power plant.

Please tell us how the Kumkol group of oilfields will be developed in the future.

The Kumkol oilfield will remain central to, and play an important role in our oil and gas development operations in the South Turgai Basin. Although the field itself is maturing, the supporting infrastructure, we have created, including oil storage, power generation, water treatment and living accommodations, provides a reliable supporting base of operations for the continued exploration, appraisal and development of more remote assets.

The Kumkol oilfield has a great diversity of petroleum operations and will continue to be a tremendously important location to provide technical and practical training for our young specialists. Surrounding the Kumkol oilfield itself is a vast expanse of land, under which two new oilfields have been discovered in the past 7 years, within just a few kilometers of the main Kumkol pool. These new fields will be developed. In part they will use the common infrastructure, available in Kumkol, and help to provide growth of our operations, and sustainable development of the entire PetroKazakhstan’s upstream business.

The Kumol oilfield has also recently been selected to perform another important role as a major hub and pump station along the Atasu-Alashankou oil pipeline. This is another important aspect of the multiple roles the Kumkol field will play in the future.

Shymkent refinery represents an important asset for you in Kazakhstan. What are your plans with regard to this refinery?

Shymkent refinery, built in 1985, has the annual production capacity of 5.25 mln tons. In 2007,Shymkent refinery (PetroKazakhstan Oil Products LLP) produced 4.06 million tons of oil, comparing to 4.04 mln tons of oil in 2006.

We continued our work on the re-equipment of oil tanks including removing oil sludge and rendering overhaul and reconstruction of an oil tank 304/4 with a capacity of 20 000 tons. Obsolete equipment of two transforming stations was replaced, which is essential for continuous operation of these stations. The company’s overall investment into the modernization amounted to $19 million.

Maximum of petroleum release with high octane rating of more than 50% was achieved from the total petroleum percentage, and the light oil products’ ratio to the value of the refined oil made about 62%.

In 2008 the planned modernization will allow to achieve the production increase in light oil products,improve the quality of refined products to EURO-3 standards, increase range of petrochemicals polypropylene products, benzyl and elementary sulfur, and reduce harmful discharges by the refinery.

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