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Kazakhstan to step up petchems effort

The Central Asian oil, gas and coal producer is attracted by demand projections for petrochemical products, while it ultimately aims to decarbonise domestic power generation

Kazakhstan is planning a major push to move up the value chain to petrochemicals, away from producing and exporting hydrocarbons, first vice-minister of energy Murat Zhurebekov told the Baker Hughes annual meeting earlier this week. It is also planning to gradually shift from coal—despite being the fuel’s leading producer in the CIS—to renewables in its domestic power generation mix.

The development of petchems industry is a trend for the wider region, including Russia, Uzbekistan, Turkmenistan and Iran. “We also want to develop our petrochemical industry,” says Zhurebekov.

The minister cites a report from consultancy McKinsey that estimates that petrochemical product consumption will rise from $1tn to $1.8tn by 2020. “It is a huge number,” he says. And he seems unconcerned about the impact of an anti-plastics backlash.

“Every human being coming into this world consumes six kilos every year of polyethylene production over his life. On top of that, the whole world is changing from natural products—from wood, from leather—to artificial ones.

“We believe that that the long-term demand is there. So, we are actively developing this part of the industry from gas to petrochemical products. We now want to sell gas, not as a feedstock, but as a product to get more value.”

Kazakhstan is creating designated economic zones with special fiscal regimes to attract interest.
“We are in contact with a few investors to develop large-scale industrial projects,” he says. “It will take five years to build and will operate for 30 years.”

Oil demand

The pivot to petchems is partly motivated by uncertainty around the price it can achieve for oil and gas on global markets. “If we look at oil demand as an equation, we have many variables—and it is difficult to predict how these variables will behave in the future,” he says, citing global economic growth, competition from alternative energy, the international geopolitical situation and concern about climate change.

“All these factors deserve their own focus,” he says. “And all these factors are inter-related, so if one factor changes it affects the other factors.”

Zhurebekov says Kazakhstan is interested in developing renewables—including wind on the Eurasian Steppe—to replace coal, which currently dominates its power generation mix. However, he is cautious about the viability of renewables in his country, which is the ninth biggest geographically in the world.

“We see the significant progress and success of alternatives technological development,” he says. “However, the minority of them are economically sustainable, so there is an issue around how fast they will be growing.”

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