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National market structure

The electricity market has two levels, wholesale and retail, and the heat power market has only a retail level. Electricity generation in Kazakhstan is carried out mainly by private enterprises. The electricity transmission system operator (TSO) is state-owned KEGOC, and 21 regional distribution companies act as distribution system operators (DSOs). The retail market is competitive, with approximately 45 companies.

 The wholesale electricity market in Kazakhstan comprises:

  • a decentralised market (bilateral contracts of electricity purchase and sale)
  • a centralised market based on purchase and sale of electricity for short-term (spot trade), mid-term (weekly, monthly) and long-term (quarterly, yearly) periods
  • a real-time balancing market
  • a system and ancillary services market
  • a capacity market (since 1 January 2019) (http://www.kegoc.kz/en/power-industry/kazakhstan-electric-power-industry-key-factors).

Daily schedules of wholesale market activity are prepared, and the dispatch of day-ahead load management is based on these schedules. DSOs work with the regional control centres for dispatch to retail customers, and state-owned KOREM administers the day-ahead market, develops preliminary dispatch schedules and implements actual supply/demand balances.

Kazakhstan’s Electric Capacity Reserve Pool (ECR Pool) was established by electricity market participants to provide contract-based capacity reserves to ensure an uninterrupted power supply for consumers (founders of the ECR Pool) in case of generating capacity failures and transmission line outages (www.kegoc.kz/sites/default/files/content-manager/ar2015-kegoc_eng_smrt.pdf).

The Financial Settlement Centre for Support to Renewable Energy Sources LLP (www.kegoc.kz/sites/default/files/content-manager/ar2015-kegoc_eng_smrt.pdf) ensures that electricity produced by renewable energy facilities is centrally purchased, sold and delivered to Kazakhstan’s Unified Power System (UPS) electricity networks.

For the first time in Kazakhstan’s history, at the end of 2018 KOREM organised centralised bidding for electricity generation capacity, with all bidders being energy-producing enterprises.

According to KOREM, total centralised trading market transactions in 2018 amounted to 21.3 billion kilowatt hours (kWh) (48% of the electricity transmitted through JSC KEGOC’s national networks), including:

  • 21 billion kWh from mid- and long-term centralised trading
  • 97.6 million kWh from day-ahead spot trading
  • 114.1 thousand kWh from same-day spot trading.

State-owned KMG is an integrated national oil and gas company implementing national policies on oil and gas sector developments and is involved in oil and gas exploration, production, refining, transportation, distribution and servicing. The company also establishes management systems for subsoil use.

Kazakhstan’s “Big 3” projects are the Tengis Consortium (TCO), the Kashagan Consortium (NCOC) and the Karachaganak Consortium (KPO), responsible for 54 Mt of oil production (60% of Kazakhstan’s total output). KMG owns equity in these three projects, and in 2018 its total equity in crude oil production was 23.6 Mt (38% of which was in the Big 3), while its fully owned subsidiaries are UzenMunayGas (5.5 Mt of production) and EmbaMunayGas (2.9 Mt). CNPC owns majority stakes in AktobeMunayGas and PetroKazakhstan, parity ownership in North Buzachi, and stakes in NCOC. In addition, 78 smaller companies produced 9 Mt of oil (10.5% of total output) (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).

KTO, nominally a subsidiary of KMG, owns the main network, and certain other pipelines are owned and operated by consortiums of investors in which KTO is a shareholder (Caspian Pipeline Consortium [CPC] exports through Russia to world markets, and the Atasu-Alashankou and Kenkiyak-Atyrau pipelines export to China). The three main refineries are owned by KMG, although Shymkent is owned by a joint venture between KMG and CNPC.

Oil product marketing and distribution is reasonably competitive, with multiple companies operating over 4 000 retail stations in the country. The three largest retail chains are KMG, Helios and SinoOil, together holding 16% of the retail market.

Two types of contracts for subsoil use have been employed in Kazakhstan: production sharing agreements (PSAs) and regular contract regimes. In January 2009, however, a Tax Code was introduced with stricter provisions than previous tax legislation. Under this Code, PSAs were no longer permitted and the Code alone established provisions for the payment of taxes and levies relating to subsoil operations, although the small number of PSAs already concluded prior to 2009 were “grandfathered” (i.e. considered exempt from the new Tax Code) (http://kazenergy.com/images/NationalReport15_English.pdf). New amendments to the Tax Code (effective 1 January 2018) introduced an alternative tax option to stimulate upstream exploration and investment development of offshore and ultra-deep hydrocarbon deposits (https://www.inform.kz/ru/v-kazahstane-vveden-al-ternativnyy-nalog-na-nedropol-zovanie_a3410605).

In November 1997, the North Caspian Sea Production Sharing Agreement (NCSPSA) was signed, and in January 2009 the NCOC took over from Agip KCO as operator under the NCSPSA. NCOC acts on behalf of a consortium of seven international companies: KMG, Eni, Shell, ExxonMobil, Total, ConocoPhillips and INPEX.

Most gas pipeline infrastructure in Kazakhstan, except for pipelines built for specific projects (e.g. CAGP), is owned and operated by KTG, an affiliate of the fully state-owned enterprise KMG and a vertically integrated TSO/DSO holding company. Regional gas distribution and sales also are carried out by KTG and its subsidiaries, and gas processing is done at four major gas processing plants (GPZs) built by specific upstream projects. KMG owns one legacy plant (KazGPZ) operating in Mangistau Region (http://kazenergy.com/images/NationalReport15_English.pdf).

As of April 2014, 12 large coal producers in Kazakhstan, both private and state-owned, held 98% of national output. The private company Eurasian Resources Group (ERG) has about 30% shares in the country’s total production of steam coal, while Samruk-Energo (representing state interests) and RUSAL (privately owned Russian Aluminium) each hold about 20%. Almost all coking coal is produced by privately owned ArcelorMittal (mainly for its own use at the Karaganda steel plant).

Coal is shipped to domestic and international consumers using the railway network managed by the state-controlled monopoly NC KTZ JSC (http://kazenergy.com/images/NationalReport15_English.pdf).

State-controlled KazAtomProm (KAP) (http://www.kazatomprom.kz/en) is the main company in the nuclear industry, but most mining activity is done through joint ventures between KAP and foreign investors. Its entitlement production is about 56% of Kazakhstan’s total output. Kazakhstan has 22 uranium production contracts, with 70% of production volumes generated by KAP’s joint ventures with foreign investors (http://kazenergy.com/images/NationalReport15_English.pdf).

Uranium oxide exports are tightly regulated by the state and specially designed railway cars are used to transport uranium to export markets.

Kazakhstan's major hydroelectric stations are in the east and south, mainly on the Irtysh River. The Shulbinskaya HPP is the third station in the Irtysh cascade of HPPs and the largest in Kazakhstan in terms of installed capacity (702 MW) (https://shges.kz/). The Ust-Kamenogorsk HPP with installed capacity of 355.6 MW is the second stage of the Irtysh cascade of HPPs and it serves as the counter-regulator of the Bukhtarma HPP (https://www.ukges.kz/). The Bukhtarma HPP has 9 units of 75 MW each, with a total capacity of 675 MW (https://bit.ly/320c7Vy). The Bukhtarma HPP, which is part of the Kazzinc company under a long-term concession, is integrated into Kazakhstan’s national energy system as the peak-load power plant that regulates the energy supply.

Large HPPs in southern Kazakhstan include Moinak HPP JSC (300 MW) (https://moynak.kz/ru/) and SC AlES Kapchagay HPP (364 MW) (http://www.ales.kz/ru/about-company/35-podrazdeleniya/70-ales-kapchagajskaya-ges).

Since fixed rates for renewable energy were introduced in 2014, there have been significant renewable energy developments in Kazakhstan. In 2017 auctions for renewable energy were introduced, in addition to the existing fixed feed-in-tariff support system. The Ministry of Energy expects that auctions will reduce the cost of electricity generated from renewable energy sources (https://abctv.kz/ru/last/pervye-aukciony-vie-v-kazahstane-provedut-v-aprele-2018-god). Auctions aim to select feasible projects and establish competitive prices for renewable electricity.

At the end of 2019, Kazakhstan had 90 renewable energy facilities with a total installed capacity of 1 050 MW (284 MW of wind power plants; 542 MW of solar power; 222 MW of small hydroelectric power stations; and 2.4 MW of bioenergy). At least 3 000 MW of installed capacity is expected to be operational by 2025, since contracts with a single purchaser Financial Settlement Centre of Renewable Energy for 2 600 MW have already been concluded (210 MW are in the process of being concluded and 190 MW have been concluded through bilateral agreements).

Auction rates are also subject to annual indexation: 30% for inflation and 70% for changes in foreign exchange rates.

The government body primarily responsible for implementing energy efficiency policies is the Ministry of Industry and Infrastructure Development. Other responsible bodies are the Ministry of Education and Science, the Ministry of Transport and Communications, the Agency on Regulation of Natural Monopolies, the Construction and Communal Services Committee, the Committee on Energy Inspection and Control, the JSC Institute of Electricity Development and Energy Saving, the Kazakhstan Energy Auditors Association and the Electric Power Association (http://www.iea.org/publications/freepublications/publication/PC_CleanEnergyTechnologyAssessmentMethodologyPilotStudyKazakhstan_WEB.pdf).

In October 2017, a mechanism to financially support energy service projects (i.e. subsidised loans) was launched in co‑operation with the United Nations Development Programme (UNDP), the Ministry of Investment and Development of the Republic of Kazakhstan and the JSC Damu Entrepreneurship Development Fund.  The Damu fund works on a revolving format, so that money invested in energy-saving projects returns to banks that will then continue to lend to green projects (https://expertonline.kz/a15778/). By February 2020, 100 projects in the amount of more than KZT 11 billion had been supported, 36 of which (worth KZT 2.1 billion) have already been implemented. These projects aim to improve the energy efficiency of residential and public buildings as well as tourist facilities; install LED lighting; modernise boiler and pump installations; and enlarge the use of renewable energy sources.

Financial and market factors for the development of energy efficiency and for investment in energy-efficient technologies in the industry sector are not encouraging. There is no one fund dedicated to financing energy efficiency programmes, and no specific financial instrument for offering loans with favourable options to enterprises for investing in planned measures. Kazenergy also stressed the predominance of restrictive mechanisms in the established legal framework, with a virtual absence of investment-encouraging provisions or incentives. Many legislative requirements adopted in relation to industry sector energy consumption (energy consumption standards, capacity factor requirements, and a ban on incandescent lighting fixtures) have not yet yielded substantial positive results (http://kazenergy.com/images/NationalReport15_English.pdf).

According to Kazenergy (2019), only eight energy service contracts were concluded during 2015‑18. The limited employment of energy services contracts results from complicated return-on-investment procedures (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf). Amendments to the Law on Energy Conservation and Energy Efficiency were therefore developed and discussed in 2020, including support measures for energy service contracts: i) reimbursing part of energy service companies’ costs for implementing energy-saving and energy-efficiency projects; and ii) subsidising part of the remuneration and/or offering partial guarantees for borrowed funds.

Another obstacle is that energy service companies’ lack of collateral prevents them from developing projects at scale. The draft law therefore proposes partial guarantees on loans issued by financial institutions and also includes clauses giving investment preference to energy service companies for large-scale development of energy service projects. For sectors not covered by the State Energy Register, it is suggested that voluntary energy audits be conducted to allow for any irrational use of energy resources to be identified quickly. Two types of energy audits (mandatory and voluntary) are defined, divided into full, targeted and express energy audits.

Furthermore, the draft law authorises local municipalities to develop, approve and implement energy saving roadmaps. It also envisages the development and implementation of a long-term National Population-Oriented Information Campaign. 

Regulatory framework

The Law on Energy Conservation and Energy Efficiency with amendments and additions of 15 January 2019 is the primary legislation governing energy efficiency measures in Kazakhstan (https://online.zakon.kz/Document/?doc_id=31112351#pos=2;-106).

The IEA has proposed 25 cross-sectoral recommendations that have been partially implemented by Kazakhstan:

  • Data collection and indicators. The Committee of Statistics publishes the Fuel and Energy Balance of the Republic of Kazakhstan; however, it does not comply with IEA format and energy efficiency indicators are difficult to track. Surveys to specifically track energy efficiency in the industry sector have not been conducted in Kazakhstan, so national action plans use energy intensity of GDP as a main indicator for energy efficiency, and sectoral energy efficiency indicators are not used to track improvements. Surveys on fuel and energy consumption in households were conducted in 2018, and household energy efficiency indicators are to be developed.
  • Strategies and action plans. The Energy Efficiency 2020 Programme adopted in 2013 was declared to be no longer in force (http://adilet.zan.kz/rus/docs/P1300000904).
  • Competitive energy markets, with appropriate regulation. Regulated retail tariffs are not fully cost-reflective and do not always account for the cost of modernisation. Much of the distribution sector is therefore stagnant and unable to replace obsolete infrastructure. Consumers are unaware of the true cost of energy and are not given incentives to save energy or to gain an understanding of its true cost. According to the Organisation for Economic Co-operation and Development (OECD), in 2011 in Kazakhstan the average fossil fuel subsidy covered about 33% of the full cost of supply. Estimated total fossil fuel subsidies in 2011 were USD 5.85 billion, which was about 3.3% of the country’s GDP. Most of the subsidies went to oil and petroleum products (55%), followed by electricity (30%) and coal (10%) (https://www.oecd.org/env/outreach/Energy%20subsidies%20and%20climate%20change%20in%20Kazakhstan.pdf). 
  • Private investment in energy efficiency. Restrictive mechanisms predominate in the legal framework, with virtually no investment-encouraging provisions or incentives (http://kazenergy.com/images/NationalReport15_English.pdf).
  • Monitoring, enforcement and evaluation. As per the Law on Energy Conservation and Energy Efficiency, the state is responsible for the accuracy of information provided to the State Energy Registry on meeting energy efficiency requirements for buildings, on complying with energy consumption norms, on conducting energy audits and on implementing energy management systems. For the Energy Efficiency 2020 Programme adopted in 2013 but no longer in force, no information was found on its monitoring and evaluation.
  • Mandatory building codes and minimum energy performance standards (MEPS). According to new legal acts, the main indicator of building energy efficiency is the classification system that assesses how efficiently a building uses heat. Permitted classes of energy efficiency of new and renovated buildings are: A (very high), B (high) and C (normal). Thus, minimum heating needs should be below level‑C heating-need values (https://www.zakon.kz/4515580-mint-rk-i-proon-razrabotali-trebovanija.html). All new buildings must have metering devices and automated heat supply stations under the Law on Energy Conservation and Energy Efficiency.
  • Aiming for net-zero energy consumption in buildings. This has not been addressed in the current legislation.
  • Improving the energy efficiency of existing buildings. The Law on Energy Conservation and Energy Efficiency introduced energy service contracts under which specialised energy service companies provide a set of services for saving energy: the company’s own expenses are reimbursed, and it profits financially from any energy savings achieved. Another incentive to improve energy efficiency is a different tariff for heat for consumers who have a heat metering device installed.
  • Energy labels or certificates for buildings. The energy efficiency class of an existing building is determined by audit results, and it is then specified in the technical passport of the building; the energy audit is also attached to the building’s technical passport.
  • Improved energy performance of building components and systems. This has not been addressed in the current legislation.
  • Mandatory MEPS and labels for appliances and equipment. According to the Law on Energy Conservation and Energy Efficiency, all energy-consuming equipment must have an energy efficiency class label. The list of energy-consuming devices to which this requirement applies is established in the technical regulations of the Customs Union, which define the class categories and energy efficiency characteristics. Assessment and labelling are done by the manufacturer or importer.
  • Test standards and measurement protocols for appliances and equipment. No information is available.
  • Market transformation policies for appliances and equipment. No information is available.
  • Phaseout of inefficient lighting products and systems. Selling and using electric incandescent lamps of 25 W and above has been prohibited (effective 1 January 2014), as is the procurement of such lamps by state agencies and entities, and by the quasi-public sector. However, construction norms and regulations on natural ambient lighting and artificial lighting adopted in 2002 do not correspond with modern requirements on energy efficiency, so updated construction norms that take new energy efficiency requirements and the prohibition of incandescent lamps into account are needed (http://www.kazenergy.com/images/stories/dor_karta/obzor_effect.pdf). Although requirements for energy-efficient lighting are expected to become more stringent, there are obstacles to widespread use, particularly a lack of quality control of products on the market. It is therefore necessary to develop methods to assess the quality of lighting products and to amend construction norms (http://lighting.eep.kz/en/). According to the latest Kazenergy report (2019), despite the ban on incandescent lamps taking effect five years ago, 60% of households still use incandescent lamps (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).
  • Energy-efficient lighting systems. No information was found on measures to promote energy-efficient lighting systems. Kazenergy recommends that incentives in the form of grants or subsidies be introduced to help regional and local authorities install high-performance public street lighting throughout the country as soon as possible.
  • Mandatory vehicle fuel efficiency standards. Kazakhstan’s large refineries were designed to produce low-octane gasoline grades such A-72 and A-76, but there are numerous additives in the production process that affect the quality of the fuel and ultimately the efficiency of combustion engines (http://www.energycharter.org/fileadmin/DocumentsMedia/Thematic/EE-Kazakhstan_2014_en.pdf). Originally, Kazakhstan was to produce and handle Euro 4 and Euro 5 motor fuels from 1 January 2016, but the Council of the Eurasian Economic Commission amended the relevant technical regulations so that the use of Euro 2 and Euro 3 gasoline and diesel fuel was extended to 1 January 2018 (https://kapital.kz/economic/46044/chto-meshaet-npz-rk-vypuskat-benzin-evro-4-i-evro-5.html). Owing to the modernisation of three oil refineries in 2018, they are now able to produce K-4 and K-5 fuels (corresponding to the Euro 4 and Euro 5 grades).
  • Measures to improve vehicle fuel efficiency. In 2015 requirements for the efficiency of transport (road, aviation, rail, marine and electric) were adopted with Ministry for Investments and Development Order No. 342 of 26 March 2015 on Approval of the Permissible Parameters of Vehicles Intended to be Driven on the Roads of the Republic of Kazakhstan (https://tengrinews.kz/zakon/pravitelstvo_respubliki_kazahstan_premer_ministr_rk/tpanspopt/id-V1500010962/). Among other things, the order mandates Euro-4 emission standards and year-of-manufacture restrictions for vehicles. However, there are financial and economic barriers to reducing transport energy consumption, and no stimulus has been offered for the introduction of energy-efficient transportation. The lack of fuel efficiency labelling for new vehicles is another problem, and car exhaust quality should be inspected annually (http://www.alatransit.kz/sites/default/files/energy_efficiency_in_transport_sector_of_the_republic_of_kazakhstan.pdf).
  • Fuel-efficient non-engine components. Energy efficiency labelling of tyres is not being conducted (http://www.alatransit.kz/sites/default/files/energy_efficiency_in_transport_sector_of_the_republic_of_kazakhstan.pdf).
  • Improved vehicle operational efficiency through eco-driving and other measures. There is no information available.
  • Transport system efficiency. Transport system efficiency, involving urban planning, the optimal integration of residential, business, commercial and cultural zones, and the adequacy of public transportation, is low but improving. The lack of navigation-time systems to optimise transport logistics seriously hinders public transport energy efficiency (http://www.alatransit.kz/sites/default/files/energy_efficiency_in_transport_sector_of_the_republic_of_kazakhstan.pdf).
  • Energy management in industry. The State Energy Registry was established for industrial enterprises consuming more than 1 500 tonnes of coal equivalent (tce) per year, and energy audits at least every five years are mandatory. All subjects of the Energy Registry with annual energy consumption of at least 100 000 tce can voluntarily sign an agreement with the state authority and local municipality to reduce energy consumption by 15% within five years. (http://kazenergy.com/images/NationalReport15_English.pdf). Previously, the Law on Energy Conservation and Energy Efficiency’s Article 10 (on energy management) required large enterprises to conduct energy audits and develop energy saving action plans, but it was excluded in 2015. According to the Kazenergy (2019), fines or other penalties for failure to implement energy saving programmes were never established, which resulted in limited execution. Additionally, procedures to conduct energy audits and to monitor their results have not yet been fully developed (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf).
  • High-efficiency industrial equipment and systems. Under the Law on Energy Conservation and Energy Efficiency, all energy-consuming equipment must have an energy efficiency class label, but no measures relate to industrial equipment specifically.
  • Energy efficiency services for small and medium-sized enterprises (SMEs). In 2018, the government-UNDP project tested a financial support mechanism that subsidised part of energy conservation and energy efficiency project remuneration (up to 10%) and/or partially guaranteed borrowed funds (up to 50%). A total of 103 projects were supported.
  • Complementary policies to support industrial energy efficiency. No information is available.
  • Energy utility involvement in promoting energy efficiency. Electricity and heat prices are currently mostly regulated and do not cover the full cost of investments. Increasing investments in the energy sector and making energy efficiency feasible will require that market incentives be delicately balanced with state steerage. The most important challenge in transitioning to market pricing is the potential impact of any market changes on end-user pricing (http://kazenergy.com/images/NationalReport15_English.pdf).

In the 2009‑15 period, the Cap Rate Programme – a tariff in exchange for investments – effected the required development of the electricity supply system. With implementation of the programme, about 3 GW of additional installed capacity was launched and 5 GW of existing electrical facilities were modernised. The implementation of cap rates had a positive impact on the work of the large electricity generation companies SevKazEnergo JSC, Atyrau CHPP JSC, Astana-Energy JSC, Stepnogorsk CHPP LLP, Pavlodarenergo JSC, AES Ust-Kamenogorsk CHPP JSC and GRES-2 of Kazakhmys Energy LLP (http://www.korem.kz/rus/o_kompanii/godovye_otchety/). Power plants reduced their marginal costs after former President N. Nazarbayev at the Security Council in November 2018 instructed them to reduce electricity tariffs. However, less than a year later, the Ministry of Energy allowed most power plants to raise their prices to cover rising transport, fuel, renewable energy subsidy and other costs (https://inbusiness.kz/ru/news/ministerstvo-energetiki-povysilo-predelnye-tarify-dlya-bolee-30-elektrostancij) by approving new cap rates for electricity for a group of energy-producing organisations (https://www.zakon.kz/4988180-izmeneny-predelnye-tarify-na.html). In April 2020, the JSC Central Asian Electric Power Corporation’s First Deputy D. Turganov announced that the approved cap rates are considerably below the actual cost of electricity production. Turganov also declared that the approved capacity tariff does not cover the costs of energy enterprise modernisation and reconstruction (https://www.zakon.kz/5018396-tma-v-kontse-tonnelya-naskolko-serezny.html). 

The Green Economy Concept, targeting 50% alternative and renewable energy in the energy mix by 2050, and the Action Plan for the Development of Alternative and Renewable Energy for 2013‑20 were adopted in 2013. The action plan envisages the launch of 106 renewable energy facilities with a total installed capacity of 3 054.6 MW: 34 wind farms (1 787 MW), 28 solar power facilities (713.5 MW), 41 small HPPs (539 MW) and 3 biofuel power plants (15.05 MW) (https://greenkaz.org/images/for_news/pdf/npa/koncepciya-po-perehodu.pdf).

In 2019, 21 renewable energy facilities were commissioned, bringing the total number to 90, with an overall capacity of 1 050 MW. Renewable energy sources were used to generate 2.4 billion kWh of electricity in 2019, a 77.8% increase from 2018. The share of renewable energy in total electricity production is therefore 2.3% (https://forbes.kz/news/2020/02/25/newsid_219828).

Another 18 renewable energy facilities with a total capacity of 605.5 MW are planned for 2020, with renewables-based generation expected to reach 3 billion kWh (https://forbes.kz/news/2020/02/25/newsid_219828).

Regional market and interconnections

Interregional electricity transmission in Kazakhstan in 2015 was 37.89 terawatt hours (TWh), including 10% transit flows between Russia and Kazakhstan.

Historically, Kazakhstan has imported power from Kyrgyzstan’s HPPs, mostly during the country’s power-rich spring, but in 2015 electricity was exported and imported between Kazakhstan and Kyrgyzstan for irrigation needs only; total electricity purchased and sold was about 0.25 TWh. No unscheduled electricity was supplied from Kazakhstan to Uzbekistan in 2015, and import flows from Russia to Kazakhstan amounted to 1.5 TWh (7.3% lower than in 2014), whereas export flows to Russia were 1.03 TWh (67% less than in 2014) (www.kegoc.kz/1.1.%20KEGOC%20ANNUAL%20REPORT.pdf).

The concept for a single electricity market was approved by the Supreme Eurasian Economic Council in May 2015. To provide consumers the freedom to choose a power supplier, Russia, Kazakhstan, Armenia and Belarus have agreed on conditions for forming spot markets and a common electric power trading platform on the basis of bilateral contracts (http://www.pravo.by/document/?guid=3871&p0=F91500078).

Kazakhstan’s gas transmission infrastructure consists of the following pipelines:

  • Central Asia-Centre: capacity 60.2 bcm/y; length 3 962 km; operator Intergas Central Asia JSC
  • Bukhara-Ural: capacity 8 bcm/y; length 1 576 km; operator Intergas Central Asia JSC
  • Orenburg-Novopskov: capacity 14.6 bcm/y; length 382 km; operator Intergas Central Asia JSC
  • Kazakhstan-China (А and В lines): capacity 30 bcm/y; length 3 909 km; operator Asian Gas Pipeline LLP
  • Zhanaozen-Aktau: capacity 2.8 bcm/y; length 432 km; operator KTG-Aimak JSC
  • Beineu-Bozoi-Shymkent: capacity 13 bcm/y (as of 2019); length 1 454 km; joint venture between KMG subsidiary KazTransGaz and CNPC subsidiary Trans-Asia Gas Pipeline
  • Bukhara gas-bearing area-Tashkent-Bishkek-Almaty: capacity 5.8 bcm/y; length 1 597 km; operator Intergas Central Asia JSC.

These gas pipelines are used for the international transit of Turkmen and Uzbek gas through Kazakhstan towards Russia and China. Total international gas transited through Kazakhstan in 2014 was 78.6 bcm: 49.3 bcm of Russian gas; 25.6 bcm of Turkmen gas; and 3.7 bcm of Uzbek gas (https://www.kaztransgas.kz/index.php/ru/32-o-kompanii/494-transportirovka-i-marketing-gaza).

Oil exports are critical to Kazakhstan’s economy. The main challenge of oil production is the long distances involved in moving crude oil to markets, leading to high transportation costs and export routes that involve transit countries (http://www.kazenergy.com/images/NationalReport15_English.pdf). The main operative oil export routes are the Atyrau-Samara pipeline; the Caspian Pipeline Consortium; the Atassu-Alashankou pipeline; and the Aktau sea terminal. The Caspian Pipeline Consortium transported the largest amount of Kazakh oil in 2018 (54.3 Mt). Exports through the Atyrau-Samara route totalled 8.8 Mt to the Ust-Luga terminal on the Baltic Sea and 6.9 Mt to the Novorossiysk port on the Black Sea. Only 1.4 Mt was exported via the Kazakhstan-China pipeline in 2018 (https://www.kazenergy.com/upload/document/energy-report/NationalReport19_en.pdf), but over 10.9 Mt went through the line in 2019 (https://oilcapital.ru/news/export/21-01-2020/pochti-11-mln-tonn-nefti-poluchil-kitay-iz-kazahstana-v-2019-godu). In January 2020 Kazakhstan had to suspend oil exports to China due to poor fuel quality resulting from an excess of organochlorine compounds (https://ru.sputniknews.kz/economy/20200128/12664743/eksport-kazakhstan-neft-china-minenergo.html). Historically, most of Kazakhstan’s crude oil exports have been to Mediterranean countries (79% in 2003 and 73% in 2005), but since 2005 there has been significant growth in exports to non-Mediterranean European countries (i.e. north-western Europe) and especially to China (http://www.kazenergy.com/images/NationalReport15_English.pdf).