IEA (2020), Kazakhstan energy profile, IEA, Paris https://www.iea.org/reports/kazakhstan-energy-profile
The Republic of Kazakhstan (Kazakhstan) lies in northern Central Asia and is bordered by the Russian Federation (Russia) to the north, China to the east, Kyrgyzstan and Uzbekistan to the south, and the Caspian Sea and Turkmenistan to the west. Kazakhstan’s land area is 2 717 300 square kilometres (km2) with almost 1 894 km of coastline on the Caspian Sea. The capital is Nur-Sultan (previously called Astana) and the country is home to 18.7 million people (www.stat.gov.kz).
Until 2015, Kazakhstan was among the world’s top ten fastest-growing economies, mainly owing to development of its rich oil, gas and coal resources and its export-oriented policies. The country is the largest oil producer in Central Asia, with the 12th-highest proven crude oil reserves in the world. Its gross domestic product (GDP) per capita has risen six-fold since 2002 (https://www.worldbank.org/en/country/kazakhstan/overview#3), and in 2019 its real GDP grew 4.5% as a result of higher consumer spending and mining-related investments (https://www.worldbank.org/en/country/kazakhstan/overview#3). Due to the global COVID‑19 pandemic, however, Kazakhstan’s GDP could contract 3% in 2020 according to World Bank estimates (https://www.worldbank.org/en/country/kazakhstan/overview#3).
Kazakhstan produced 91.9 million tonnes (Mt) of crude oil in 2018 (including gas condensate) with increased production at its Kashagan field (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf). Kashagan, the fifth-largest reserve in the world, is expected to play a major role in Kazakhstan's future oil production, with projected production of 450 thousand barrels per day (kb/d) by 2025 and 955 kb/d by 2040.
Progress has been achieved in Kazakhstan’s gas network development: in 2016 three lines of the transnational Turkmenistan-Uzbekistan-Kazakhstan-China gas pipeline were completed, increasing transit gas volumes from 30 billion cubic metres per year (bcm/y) to 55 bcm/y, and the Beineu-Bozoi-Shymkent pipeline connecting the western producing region with the densely populated south also became operational in 2016 (http://energo.gov.kz/index.php?id=49).
- Kazakhstan is a major producer of all fossil fuels (coal, crude oil and natural gas).
- In 2018, Kazakhstan was the world’s 9th-largest coal producer (108 million tonnes [Mt]). It ranked 17th in the world for crude oil production (91.9 Mt), and 24th for natural gas (38.7 bcm).
- It is the first energy producer among EU4Energy focus countries (16th in the world in 2018). It produces more than twice as much crude oil as Azerbaijan but around half the natural gas produced in Turkmenistan.
- Kazakhstan’s total energy production (178 million tonnes of oil equivalent [Mtoe] in 2018) covers more than twice its energy demand.
- Kazakhstan is also a major energy exporter. In 2018, it was the world’s 9th-largest exporter of coal, 9th of crude oil and 12th of natural gas.
- In 2018, Kazakhstan’s energy consumption (measured by total primary energy supply) was 76 Mtoe, comparable to consumption in the Netherlands (73 Mtoe). Among EU4Energy focus countries, Kazakhstan is the second-largest energy consumer after Ukraine.
- Coal represents around half of Kazakhstan’s energy mix (50% in 2018), followed by oil and natural gas (both with 25% shares).
- Coal is mostly transformed into electricity and heat before reaching the final consumer. Coal fuels around 70% of electricity generation (in 2018), followed by natural gas (20% in 2018).
- Total final consumption (TFC; excluding transformation processes) amounts to around 40 Mtoe (42 Mtoe in 2018).
- Industry is the primary final energy consumer (16 Mtoe in 2018), followed by the residential sector (11 Mtoe).
- Oil and coal together form over 50% of the final consumption. Share of natural gas is relatively low (13% share of TFC in 2018).
- Renewable energy accounted for only 1.4% of the energy mix (TPES) in 2018. Share in electricity generation was 10.4% in 2018, of which most is hydro electricity. Generation from wind plants increased 18.3% from 2017 to 2018 (https://www.korem.kz/rus/o_kompanii/godovye_otchety/).
According to the Constitution, the president determines the strategic directions of domestic and foreign policy, and the executive branch is legally mandated to formulate its economic, social and other policies accordingly.
The newly formed Ministry of Energy is a key policymaking institution with regulatory authority over oil and gas extraction, oil refining, transportation of hydrocarbons, gas processing and distribution, power generation, coal production and nuclear energy.
The Ministry of Industry and Infrastructural Development is responsible for the development of the industry sector: industrial and innovative developments; scientific and technical developments; mining and metallurgical complex development; and local content, engineering, coal, chemical, pharmaceutical and medical industry development.
The newly founded Ministry of Ecology, Geology and Natural Resources (2019) is responsible for environmental protection policy, “green economy” development, waste management (excluding municipal, medical and radioactive waste), etc.
The Ministry of National Economy is responsible for developing a co-ordinated macroeconomic policy through strategic and budget planning.
The key task of the Ministry of Finance is to develop and implement budget policy.
Legislative power is executed by a bicameral parliament composed of a senate (upper house) of 47 deputies and the Mazhilis (or Majilis) (lower house) of 107 deputies. Kazakhstan's parliament amends the Constitution, approves the budget, programmes and government reports, adopts laws, decides whether the country is at war or peace, initiates referendums and ratifies international treaties, among other duties. It is currently implementing two presidential programmes: 100 Concrete Steps and Strategy Kazakhstan 2050. The Mazhilis does not typically play a policymaking role, but reviews policies developed and proposed by the government and enacts laws accordingly.
In early 2017, the President of Kazakhstan decided to transfer some presidential power (in regulating social and economic processes) to the parliament and the government. This transfer of power is only at a technical level, however: the president retains the status of supreme arbiter capable of regulating relationships among the legislative, executive and judicial branches of government, and of addressing issues of national security and the country’s defence capabilities (http://khabar.kz/ru/arkhiv-zheti-kn/item/73940-zheti-kn-29-yanvarya-2017).
In Kazakhstan, there are a supreme court, local (regional, city and district) courts and specialised (military, juvenile and economic) courts; other specialised courts may also be created. The supreme court – the highest judicial body on civil, criminal, economic and other cases under the jurisdiction of the lower courts – exercises procedural forms of judicial supervision over their activities and provides explanations on issues of judicial practice.
In 2016, Kazakhstan's justice system was converted to a three-tier system (first, appeal and cassation) and the new Code of Civil Procedure entered into force. To improve its attractiveness for foreign investors, Kazakhstan plans to generalise the judicial practice of investment disputes. In matters of administrative and criminal humanisation of legislation, it plans to apply penalties and reasonable deadlines for their payment (http://www.kazpravda.kz/articles/view/sudebnaya-sistema--vazhnoe-zveno-uspeshnoi-realizatsii-poslaniya1/).
The Presidential Administration’s Socioeconomic Monitoring Department controls realisation of the strategic directions set by the president. The Ministry of Energy performs most regulatory and control functions in the energy sector, and the Ministry for Investments and Development has regulatory authority over industrial safety as well as licensing of exports and imports, including energy products. Drafts of subsoil contracts and feasibility studies for upstream projects are examined for their potential economic effects by the Ministry of National Economy, and the Ministry of Finance’s general regulatory functions include monitoring assets deemed strategic by the state. The Ministry of Labour and Social Protection of Population and the Ministry of Education and Science monitor energy projects to ensure they meet the requirements for hiring local Kazakh personnel (the 2010 Law on Subsoil Use requires that oil and gas producers source prescribed percentages of goods, services and personnel locally) (http://kazenergy.com/images/NationalReport15_English.pdf).
The Committee for Regulation of Natural Monopolies and Protection of Competition is the state body for protection of competition and restriction of monopolistic activities on the relevant commodities markets; for control and regulation of activities related to state monopoly within the limits provided by legislation; and for cross-sector co‑ordination, regulation and control of natural monopolies and regulated markets. It is responsible for controlling and regulating the activities of energy-producing and energy-providing organisations in accordance with the Law on Electric Energy (http://www.kremzk.gov.kz/eng/).
In 2012, the government launched the Kazakhstan 2050 Strategy defining the course for long-term economic development. It identifies social, economic and political reforms aimed at placing Kazakhstan among the top 30 global economies by 2050. Economic growth is to be achieved by reaching new export markets, improving the investment climate and further developing the private sector and public-private partnerships. The strategy stipulates that alternative and “green” energy technologies must generate up to 50% of all consumed energy by 2050. It also declares that all mining companies should transition to environmentally friendly production only.
In May 2013, the Green Economy Concept was adopted, setting the ambitious target of 50% electricity generation from sources other than coal or oil, including gas, nuclear and renewable energy, by 2050. The government plans to achieve this by phasing out ageing infrastructure, increasing the use of these alternative fuels, installing efficient energy technologies and complying with high ecological standards.
The 100 Concrete Steps programme introduced in 2015 aims to boost transparency and accountability through structural reforms that will: 1) create a professional government apparatus; 2) ensure rule of law; and 3) improve industrialisation policy and promote growth. Steps include privatising agricultural lands to encourage their efficient use; optimising tax and customs policies and procedures; introducing a “single window” principle for customs procedures for exporters and importers; integrating customs and tax systems; simplifying the legalisation procedure for property and money; privatising state-monopolised examination of pre-design and design documents; and replacing outdated construction standards and rules with the eurocodes system. As part of the programme, the Astana International Financial Centre (AIFC) was opened in 2018 and one of its tools for attracting investors is investment residency. The government has also introduced reforms to support a favourable investment climate: rules for establishing a one-stop shop for investors were adopted in February 2015, and the Law on Investments was amended in December 2014, supported by a liberalised visa regime.
Official energy statistics in Kazakhstan are the responsibility of the Committee on Statistics under the Ministry of National Economy.
In 2016, the energy data collection system was modified as part of modernisation efforts by the Committee on Statistics. In 2018 the Committee on Statistics conducted a household fuel and energy consumption survey, covering 21 000 households. This was Kazakhstan’s first-ever household survey to specifically focus on energy consumption. The survey included various questions on fuel consumption for heating, cooking, water heating, etc., and the results are available on the Committee on Statistics website.
The main energy publication is the annual Fuel and Energy Balance of the Republic of Kazakhstan. It contains annual data on energy supply and demand in physical and energy units with sectoral breakdowns, as well as energy intensity indicators. The publication is available online in electronic format, and the layout follows that developed under the Soviet Union.
Official annual data is shared with the United Nations Statistics Division (UNSD) and the International Energy Agency (IEA) through five joint IEA/Eurostat/UNECE questionnaires. Monthly oil and gas data are also collected and transmitted to the UNSD for publication through the Joint Organisations Data Initiative (JODI), as well as to the Interstate Statistical Committee of the Commonwealth of Independent States (CIS).
The Committee on Statistics maintains an national energy statistics working group, bringing together data providers and data users (energy companies, researchers and ministry representatives) to improve the quality and use of energy data. Official energy statistics are actively used for electricity sector modelling by the Kazakh Research Institute of Power Engineering. Regional energy intensity indicators are used in regional development policy.
The Committee on Statistics has done major work in recent years on consolidating energy statistics, with some technical and financial support from the internationally funded Kazstat and INOGATE programmes. There are also plans to publish the energy balance in International Recommendations for Energy Statistics (IRES) format, in addition to the standard format, to increase both domestic and international use of national energy data.