Ten years of KazTransGas
Serik Sultangaliyev, Timur Kulibayev
Kazakhstan is a major Russian partner in the energy sector of the economy. A wide cooperation sphere is related to natural gas. The KazTransGas Company has been cooperating with Russian counterparts for ten years in the gas sphere. VIP-Premier tells the readers how the company marked the tenth anniversary in the Kazakh capital.
Serik S. Sultangaliyev has been director general of KazTransGas since 2005. Born in 1953 in the village of Jalanash in Alma Ata region he graduated from the Lenin Polytechnic Institute in Kazakhstan. He worked as an architect in Kazgorstroiproject Company, occupied managerial positions in the housing department of Alma Ata, and was first deputy mayor of Alma Ata. In 1995-2004 he was president of Aisel Kazakhstan consortium of major construction companies of the republic. In 2004-2005 he was deputy director general of KazTransGas. Awarded with the Kurmet Order, the medal to the 10th Anniversary of the Independence of Kazakhstan, the jubilee medal 70 Years of Pipeline Transport of Kazakhstan, and the Order of Peter the Great first degree. He holds the title of Honorary Constructor of Kazakhstan and is a member of the Union of Soviet Architects. He is honorary citizen of several cities of Kazakhstan and is fond of golf.
Timur A. Kulibayev has been deputy CEO of the Samruk-Kazyna National Welfare Fund (FNB) since 2005. Born in 1966 in Alma Ata he graduated in 1988 from the Lomonosov State University in Moscow. He was junior research fellow of the Research Institute of Economy, Planning and Norms at the State Planning Committee of the Kazakh Soviet Socialist Republic, director of the Fund for cultural, social, scientific and technical development of Kazakhstan. Since 1992 he has headed various business structures. In 1997-1999 he was vice-president for economy and finance of the Kazakhoil National Oil and Gas Company. In 1999 he was appointed president of KazTransOil. In 2001-2002 he was director general of the Oil and Gas National Company. In 2002-2005 he was first vice-president of KazMunaiGas. In 2005 he worked as an adviser to the president of Kazakhstan. Since the same time he has been heading the KazEnergy Association that unites enterprises of the oil, gas and energy sector. Awarded with the Kurmet and Friendship Orders, the jubilee medal Ten Years of Kazakh Constitution, and the jubilee medal 10 Years of Astana. Holds the degree of Candidate of Sciences, Economy. Married with a son and daughter.
Nikolai V. Pleshakov is the director general of Limonte Group of Companies (Moscow) and member of the Board of Directors of Borkhimmash Company in Borisoglebsk, Voronezh region. Born in 1960 he graduated from the Volgograd Polytechnic Institute. In 2002-2002 he was director general of the Moscow Bearing Company. In 2002-2004 he was director general of the European Bearing Corporation Trade House in Moscow. In 2004-2007 he was director general of the bearing plant in the city of Volzhsky in Volgograd region. Married with two daughters.
Meiram S. Yerkaliyev is the director general of the Meiram-Kurylys Company in the city of Uralsk in Kazakhstan. Born in 1972 he graduated from the Cherepovets Supreme Military Radio Electronic Engineering School in Vologda region and the Aegean University in Turkey. He worked in oil and gas companies KazakhTurkMunai (KTM), Schlumberger, BJ, KIOS, KIO, and Baker Hews, all of them with foreign equity. Speaks Russian, English, Kazakh, Persian, and Turkish languages. Married with three children.
The impression of a new city emerges immediately in your conscience. The same happened with Astana, which looked like a big nighttime gravure (the plane from Moscow landed in the Kazakh capital late at night). High buildings with multi-color illumination triggered fantastic feelings: they resembled landed alien spacecraft. Astana is different at dawn and resembles a spree of unusual architectural eclecticism. Strange as it may seem, various construction styles combine quite organically. Buildings are separated by major distances and are divided by broad avenues. Therefore each is conceived separately. After you look more attentively you understand it was the plan of city builders who wanted the new national capital to combine the wealth of modern architectural thoughts, make numerous Oriental and Western motives harmonically interweave in the graceful stone monoliths, and add grandeur to the man-made greatness that emerged on the background of surrounding desert-like and endless steppe. The new Kazakh capital was built on the initiative of President Nursultan Nazarbayev. Although the work has not yet been completed Astana is already an artificial miracle.
GAS IS THE STATE RESOURCE
Ten years of the biggest energy company of Kazakhstan – KazTransGas National Company – was definitely an international event. Guests included Russian business representatives for whom cooperation with the Kazakh gas industry is a priority.
Kazakh gas industry is big. The republic occupies the 15th place in the world by gas reserves, which are estimated at some 3.3 trillion cubic meters and forecasted to comprise 6-8 trillion cubic meters. Annual gas production is close to 20 billion cubic meters. Kazakhstan is also rich in oil with estimated reserves of hundreds of millions of tons.
For Russians it is important that cooperation is a priority for Kazakhstan, including in the energy sphere.
In late 1991 Kazakhstan reformed its energy sector governance after the Soviet disintegration. It reorganized the oil and gas industry and as a result two giant companies emerged among a dozen of ventures that efficiently operate on the oil and gas market. They are the KazMunaiGas National Company which is often compared to Gazprom and has the Samruk Kazyna National Welfare Fund as the only stockholder, and KazTransGas with KazMunaiGas as the only stockholder. The Samruk Kazyna Fund was created by a decree of the president of Kazakhstan and a government resolution in 2008 to accumulate finances for future generations and reduce vulnerability of the national economy to the impact of unfavorable outside factors and changing world prices.
KAZTRANSGAS YESTERDAY AND TODAY
Тhe gala ceremony and a big concert devoted to the tenth anniversary of KazTransGas National Company took place on April 16 in one of the major premises of Astana – the Palace of Peace and Accord. Limos and comfortable coaches arrived one after another to the pyramid-shaped building. Festively dressed people walked through a wide entry alley. A cool lounge accommodated them inside the pyramid with welcoming billboards and flowers. The stairs in the lounge led participants to the basement of the pyramid where a symphonic orchestra performed classical music. The combination of the pyramid and orchestra set a proper mood for the festivity.
There were a lot of speeches and greetings at the event. Not only moderators of the gala event, but also the speakers and actors addressed the audience in two languages. They showed the Russian language was equal to the Kazakh language in the republic.
In the beginning of the gala meeting Kazakh Oil and Gas Deputy Minister Lyazzat Kiinov read out a message of gratitude from Kazakh President Nursultan Nazarbayev to the staff of the company celebrating the jubilee.
VIP-Premier based its report of the event on two speeches delivered by KazTransGas Director General Serik Sultangaliyev and Deputy CEO of the Samruk-Kazyna National Welfare Fund Timur Kulibayev.
Ten years seem to be a short term, but gas transportation workers did a lot. It all began when Kazakh President Nursultan Nazarbayev set the task to recover the republic from a deep crisis of the 1990s. At that time the gas transportation system of Kazakhstan was in the hands of private companies and represented a chaotic business that targeted only profits and ignored systemic investments into the reconstruction of gas transportation networks with a service record exceeding 30 years. In the difficult 1990s when the national economy shrank nearly by half the government decided to hand over the gas transportation system to a foreign investor – the Belgian Tractebel Company, which failed to cope with the set tasks. As a result, in 2000 the president of Kazakhstan adopted a difficult, but only possible decision to return gas transportation assets to the state. The same year the KazTransGas joint-stock company was set up to manage all gas transportation assets of the country. Current president of KazMunaiGas Uzakbai Karabalin was appointed company CEO.
Serik Sultangaliyev recalled a major volume of work was in store for the company. They say: what the eyes fear, hands do. In 2000-2009 the company built over 800 kilometers of new domestic gas trunk lines and their total length currently comprises 12 thousand kilometers.
One of KazTransGas tasks is to transport gas to Russia and another one is to supply gas to the south of the country. KazTransGas Aimak subsidiary deals with gas deliveries to several regions of the country. The company supplies natural gas to South Kazakhstan, Jambyl, Kzyl-Orda, Mangistau, West Kazakhstan, and Kostanai regions. Another KazTransGas subsidiary, KazTransGas Almaty, operates in Alma Ata and the surrounding region.
KazTransGas Aimak delivers Uzbek gas to customers. In Uralsk gas arrives from the Kazakh Karachaganak field after processing at the Orenburg facility. The company buys Russian gas for Kostanai region. Aktyubinsk and Kzyl-Orda consume local gas.
In the framework of regional gas supply program for Alma Ata region for the period up to 2015 gas deliveries were provided to numerous settlements in Iliisk district. It was the first stage of the regional gas supply project for Alma Ata region. The regional budget appropriated over 300 million tenge (60 million rubles) for its implementation. Over 30 billion tenge will be necessary to provide gas supplies to the whole region. The Kostanaigaz Company is in charge of gas supplies to households and utilities in Kostanai region.
KazTransGas accounts for over 85 percent of all national gas supplies. The presence of gas in the stoves of every Kazakh depends on efficient operations of the company. New projects are being implemented and designed. They include the construction of a gas trunk line Beineu-Bozoi-Akbulak and of the Caspian gas pipeline which is to fully transit Turkmen gas and export Kazakh gas to Russia, to the final destination point in the town of Alexandrov Gai.
Today KazTransGas not only exports and sales gas, but also produces it. Total hydrocarbon production at Amangeldy field comprises close to two billion cubic meters. But that is only a beginning, as wildcat drilling continues and reserves prospected yet in Soviet times confirm the presence of major deposits. They say people in southern Kazakhstan cried of happiness and went to the streets to celebrate the first gas deliveries to their settlements.
KazTransGas is one of the most successful companies in the republic and provides jobs to over ten thousand people. KazTransGas business and social activities are indivisible. The social policy of the company has several guidelines: environmental protection, support to the local population and social welfare package for own staff.
Timur Kulibayev spoke about the global economic crisis which affected the Kazakh economy, about the role of the republican oil and gas sector of which the jubilee company is a part. If in pre-crisis years the GDP share contributed by the oil and gas complex of Kazakhstan sharply grew from 12 to 22 percent, in 2008-2009 the republic lived through hard times. The oil and gas sector helped the government ease the crisis consequences. The National Fund, which accumulates oil and gas proceeds, also played a role. It provided major support to the banking and construction sectors, as well as to small and medium businesses.
In ten years of operations the total capital expenditure of the company into the national gas transportation system comprised 250 billion tenge (close to 50 billion Russian rubles). As a result, the carrying capacity of gas pipelines upped several-fold: it exceeded 190 billion cubic meters in 2009. From 2000 to 2009 one trillion cubic meters were transported.
There are numerous landmark events in ten years of company history. They include the recent launch of the first line of Kazakhstan-China gas pipeline. The gala ceremony took place last December 12 and Kazakh President Nursultan Nazarbayev and his Chinese counterpart Hu Jintao participated. The Kazakhstan-China pipeline is expected to transport six billion cubic meters of gas in 2010 and by 2012 its capacity will up to 30 billion cubic meters.
Business performance and successful accomplishment of the tasks directly depend on people. In the year of the anniversary the dedicated service of numerous outstanding gas workers was not forgotten. Veterans were greeted (many Russians among them) who devoted their lives to the gas industry of Kazakhstan.
Timur Kulibayev named distinguished gas workers. Among them Vladimir Chumakov, former director general of Yugtransgaz, a Gazprom subsidiary, who in the 1980s headed the Central Asia trunk line department; Yeset Azerbayev, former director general of Kazakhgaz Holding; Anatoly Yatsenko, former chief engineer of Yugtransgaz; Valentin Nikishin, former director general of Mostransgaz who worked for many years as chief engineer of Makatsk department of gas trunk lines in Kazakhstan (died in 2005); Tanbai Naushiyev, technical director of Intergaz Central Asia, and many others.
According to various data, in the middle of the XXI century the share of hydrocarbon gas fuel may comprise 30 percent of the global energy balance. Competition for gas supply sources is growing in the world. Ten years ago Kazakhstan joined the big gas game.
Sustainable development of KazTransGas into a national gas operator allowed the company to build long-term relations with foreign partners and with Russia’s Gazprom, first and foremost. The company participates through its only stockholder KazMunaiGas in the KazRosGaz joint venture founded in 2001. The JV arranges for Russian purchases of natural gas in Kazakhstan, its processing at Orenburg facility in Russia, efficient exports of Kazakh gas, implementation of investment projects in the gas industry on the basis of equal, mutually beneficial, sustainable and long-term cooperation between Kazakhstan and Russia.
The main activity of the JV is the provision of services to process hydrocarbons from Orenburg region and Karachaganak field. Besides, it transits Russian gas through the territory of Kazakhstan by Buhara-Ural and Orenburg-Novopskov pipelines and Turkmen gas through Kazakh and Russian territories.
In 2007 the governments of Russia, Kazakhstan, and Turkmenistan signed an agreement to build the Caspian gas pipeline to transport natural gas from Caspian Sea and other fields in Turkmenistan and Kazakhstan to Russia. A joint venture of Gazprom and LUKOIL – Tsentrcaspneftegaz – carries out geological prospecting at the Central field in the Caspian Sea. A new oil and gas condensate field has been discovered already.
KazTransGas earns the main proceeds from transit of Uzbek and Turkmen gas for Gazprom. At present Turkmenia has cut gas supplies to Russia, which means Kazakh exports will increase through KazRosGaz joint venture with Gazprom. However the export price became a key issue in conditions of market volatility. Successive and constructive talks with Gazprom helped KazRosGaz considerably up the export price of Karachaganak gas to 240 dollars per thousand cubic meters on the border between Kazakhstan and Russia. According to 2008 data, Gazprom acquired 9.6 billion cubic meters of Kazakh gas. Kazakh gas transportation for export through Russia has been fulfilled 118 percent.
Present-day cooperation between Kazakhstan and Russia cannot bypass economic competition issues. Kazakhstan is eyeing a possibility to export its gas to Europe although previously it was the exclusive mission of Gazprom. But Kazakhstan is opening its southern gate to Russia, which is an existing reality. That means both countries can engage in equal partnership.
KazTransGas is constantly initiating new partnership programs. The number of partners and joint projects has considerably expanded after Kazakhstan launched gas cooperation with China and the European Union. There is a danger for Russia to lose wide possibilities in strategic partnership because of global projects of Kazakh gas producers. Our magazine was interested to know how Russian partnership with KazTransGas is currently developing. During festivities in Astana VIP-Premier journalists met with representatives of companies that eye cooperation with the Kazakh gas giant. We shall tell you about the planned union between two companies which caused our interest – Meiram-Kurylys from Uralsk (Kazakhstan) and the Russian Limonte Company from Moscow.
Limonte is a holding which includes high-capacity Borkhimmash facility in Voronezh region with a 45-year successful experience in the production of gas air-coolers (ABO) and heat exchangers. The enterprise has equipped the famous Soviet Urengoi-Pomary-Uzhgorod pipeline. At present Borkhimmash equipment is used at major objects of Russian Gazprom and NOVOTEK, such as Bovanenkovo-Ukhta and Yurkharovskoe fields and the Nord Stream gas pipeline. The enterprise is completing the design of new air-coolers for future international projects, such as Sakhalin-Khabarovsk-Vladivostok pipeline, gas fields on Yamal, the Nord and South Stream projects. Limonte and Borkhimmash actively participate in the modernization and construction of many refineries in Russia belonging to Rosneft, LUKOIL, Sibur, Surgutneftegaz, and Gazpromneft oil majors.
The quality of Borkhimmash production has been certified as meeting all modern international standards. The company has its own engineering center that permanently renews the product line and keeps production at the frontline of the scientific and technical progress. Nikolai Pleshakov is the director general of Limonte.
Meiram-Kurylys is a young and dynamically developing Kazakh company engaged in the construction of civilian and industrial objects, high and medium-pressure oil and gas trunk pipelines, production of metal constructions of any complexity, and technological equipment assembly at oil and gas fields. Meiram-Kurylys headed by Meiram Yerkaliev acquired considerable experience in cooperation with such major customers, as Karachaganak Petroleum Operating (KPO), which is the main operator of Karachaganak field, Agip (Italy), administration of Mangistau region of Kazakhstan, etc. The company has its own production facilities in western Kazakhstan where it occupied leading positions in the construction industry.
Partner-companies plan to set up a joint venture in Kazakhstan which will invest into technologies and equipment and will train personnel for a new production facility.
After the festivities in Astana KazTransGas held a presentation of the new JV project and demonstrated the capabilities of the two abovementioned companies. The partnership project was appraised by KazTransGas representatives, including acting First Deputy Director General Almaz Jamanbekov. A protocol was signed to confirm the readiness of KazTransGas State Company of Kazakhstan to cooperate with Meiram-Kurylys and Limonte in the design and implementation of the project to build a gas trunk line from Beineu to Shymkent.
A presentation of the JV was also held in KazTransGas Almaty (in the town of Taraz) and a protocol on pilot project implementation was signed.
It is important and prestigious for Russian business to be among the partners of Kazakh energy sector, like it is vital for Kazakh companies to participate in numerous energy projects in Russia. It is a demand of time.
By Yuri SHILOV