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Kazakhstan opts for oil refinery upgrades, not new plant
October 1, 2014 / 10:34 AM / 3 years ago

Kazakhstan opts for oil refinery upgrades, not new plant

ALMATY, Oct 1 (Reuters) - Kazakhstan will rely on upgrading its three oil refineries, and not build a new one, to achieve self sufficiency in most oil products by 2016, Deputy Energy Minister Magzum Mirzagaliyev said on Wednesday.

It will continue to import fuel from Russia during the work. Kazakhstan is the second-largest post-Soviet oil producer after Russia, but struggles to meet rising energy consumption from an economy which grew by 6 percent last year.

Kazakhstan’s fuel deficit, covered in part by Russia which supplies duty-free some 30 percent of all fuel sold in the country, had earlier prompted the government to think about building the fourth refinery by 2019.

However, the ongoing upgrade of the existing three Soviet-era refineries will allow it to postpone the costly construction of a new refinery, said Mirzagaliyev.

“Once we have completed this upgrade in 2016, we will fully provide ourselves with oil products,” he told reporters on the sidelines of an international oil and gas conference. “Our estimates show that we won’t have a deficit of fuel until 2022-23.”

Kazakhstan processes annually 14.5 million tonnes of crude at its refineries. The government plans to boost refining to 17.5 million tonnes in 2016 to become self-sufficient in all oil products, except diesel.

“After 2022, we will probably begin to face a shortage of diesel fuel,” Mirzagaliyev said, adding the government would have to consider building the fourth refinery after that date.

“For the time being, we consider it more expedient to expand the capacity of the Shymkent refinery.”

The refinery, in southern Kazakhstan, is the country’s second largest. Launched in 1984, it processed 4.9 million tonnes of oil last year.

It is 50 percent owned by Kazakh state oil and gas company KazMunaiGas. The remaining half is held by PetroKazakhstan, a Kazakh-Chinese venture, in which KazMunaiGas has 30 percent. (Reporting by Mariya Gordeyeva and Alla Afanasyeva; Writing by Dmitry Solovyov, editing by William Hardy)

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