The Youngest Energy Industry
The gas industry of Kazakhstan is relatively young, it's development commenced in 70-ies of the last century. Kazakh Soviet Encyclopedia published in 1981 highlights that “the availability of huge commercial reserves of natural gas, high efficiency of their use and relatively low capital intensity factor allow within the short term period to change the structure of the fuel mix in favor of gas. The development potential of the gas industry in Kazakhstan is very big”.
Development in the former USSR of integrated infrastructure resulted in construction of transmission networks on the territory of Kazakhstan including the trunk gas pipelines Bukhara-Ural; Central Asia-Center; and Bukhara-Tashkent-Frunze-Alma-Ata which are still used to supply the blue fuel to customers.
The integrated gas transportation system was centrally administered and in Kazakhstan the operations were mainly managed by Kazglavgaz. Turkmen and Uzbek gas had to be transported northwards through the territory of Kazakhstan . Remarkably, the main pipeline routes were designed and laid through the territory of western Kazakhstan exactly in the areas were the major Kazakhstani hydrocarbon fields are located.
After Kazakhstan gained its independence, the management of the main gas pipelines had been taken by the local state-owned holding, Kazakhgas. Meanwhile the effective business operations required high level of capital investments not only to ensure the sustainable operations and maintenance but for the prospective system development as well. Under then prevailing general economic conditions Kazakhgas could not adequately address these challenges and the government took decision to attract foreign investors. In summer 1997, Belgian Tractebel S.A. and the Republic of Kazakhstan entered into Concession agreement for domestic and international gas transportation systems.
The concession, with the term of 15 years and an option of further prolongation subject to fulfillment of investment commitments, covered the bulk of the system assets including 10 trunk gas pipelines, 21 gas compressor stations equipped with pipe compressor units, and three underground gas storages.
To operate under the Concession, the potential investor established two companies, Intergas Central Asia (gas pipelines operator), and a utility monopoly, Almaty Power Consolidated.
Besides, along with appearance of the concessionaire the gas demand in the country had sharply declined as the investor was dealing solely with the gas transmission and was not involved in gas supplies from its own reserves. For the end users it turned into growth of prices for irregularly supplied gas and power. Used to the social protection consumers probably for the for the first time in their experience had to face disconnections of power and heating provoked by irregular payments of their own salaries and by litigations with the gas suppliers. Three towns in the southern Kazakhstan were seriously suffering from the shortages of gas and heating supplies, and some witnesses say that the freezing population was chopping down parks and gardens. Protects meetings became habitual in Almaty, especially active were pensioners of “Pokoleniye” movement.
Feeling its unstable position Tractebel wasn't prompt to make any investments in the industry and already in 1999 the company's management started to articulate its reservations concerning the reasonability of its presence in Kazakhstan . The problem of the management of the gas transportation system had to be addressed immediately, especially because the Uzbek suppliers were often inclined to raise gas prices.
In February 2000, the national oil transportation company, KazTransOil, established a subsidiary, KazTransGas, which took over 100% stake in Intergas Central Asia. KazTransGas is entrusted to represent the governmental interests both, on the domestic gas market, and internationally. The company manages the business of transportation of natural gas through the main gas pipelines, performs gas trading on domestic and external markets, carries out development, financing, construction and operates gas pipelines and gas storages. Over the three recent years of operations on the domestic gas market the company has achieved more than impressive results.
KazTransGas was established pursuant to the Resolution of the Government of the Republic of Kazakhstan No. 173 dated 5 February, 2000.
Main activities of KazTransGas group of companies include :
• Transportation of natural gas through main gas pipelines, domestic transportation, export transportation, international transit and storage of natural gas in underground gas storages (UGS);
• Transportation of natural gas through distribution gas pipelines;
• Sales of natural gas on the domestic market;
• Gas production and processing;
KazTransGas is the Contractor under the subsoil use agreement for development of Amangeldy group of gas fields in Zhambyl region.
• Production and sales of electrical power;
• Implementation of governmental policies for development of gas industry of Kazakhstan ;
Starting from February, 2002, KazTransGas is a part of the national oil and gas company, KazMunayGas.
KazTransGas Group of companies, in aggregate, includes gas production, transportation, marketing and trading companies involved in sales of gas and gas products; operates the assets for generation and distribution of heat and power energy, and a number of service companies.
Currently, KTG owns the main gas pipeline transportation system, regional gas distribution assets in six regions, and the stock in certain domestic power companies. In parallel, by way of is undertaking the projects outside Kazakhstan thus, the Company develops its gas transmission base and expands the gas sales market share.
KazTransGas Group of companies includes:
- Amangeldy Gas, LLP, operator for production and processing of natural gas at Amangeldy gas field
- Intergas Central Asia , JSC, operator of main gas pipeline transmission;
- KyrKazGas, a joint venture with KyrgyzGas, JSC, operates and maintains the sections of Bukhara Gas Bearing Region-Tashkent-Bishkek-Almaty main gas pipeline passing through the territory of Kyrgyz Republic;
- KazTransGas Aimak, JSC, regional gas transmission, distribution and sales of natural gas to industrial, residential and corporate clients;
- KazTransGas Almaty, JSC, management of gas and gas distribution companies supplying natural gas to the clients in Almaty city and region;
- KazTransGas Tbilisi, LLC, gas supply of Tbilisi;
* KazTransGas LNG, LLP, operator for treatment and processing of natural gas from Zhanazhol gas field supplied to clients in Aktobe ;
* Samruk-Energo, JSC, effective management of power assets held in Zhambyl Power Plant named after T.Baturov, Almaty Power Consolidated, KMG-Energo, JSC, elaboration and implementation of long-term state policy for modernization of existing and construction of new generating capacity.
Being aware of its activities' impact on local communities, and ultimately, on the national economy and public welfare, KazTransGas takes seriously the issue of its corporate and civil responsibility.
While performing its obligations in relation to the sole shareholder, the NC KazMunayGas, the employees, business partners and to the public in general, KazTransGas strictly follows the governing legislation and civil norms.
