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Oil & Gas Equipment and Services

Kazakhstan is ranked 11th in the world in terms of proven oil reserves (US Energy Information Administration, Kazakhstan, October 28, 2013) and is the second largest oil producer among the former Soviet Republics after Russia, producing nearly 1.6 million barrels per day (bbl/d). Kazakhstan has the Caspian Sea's largest recoverable crude oil reserves. The Government of Kazakhstan and foreign investors continue to focus heavily on the hydrocarbons sector, which, since 1991, has received approximately 60% of the foreign direct investment in Kazakhstan, and constitutes approximately 53% of its export revenue. Existing oil extraction sites offshore in the North Caspian, combined with onshore fields currently under development, signify Kazakhstan as a potential major near-term oil exporter.

According to Kazakhstan’s Oil and Gas Ministry, oil and gas production in 2013 was 81.8 million tons - 1.56 million bbl/d. In 2010, oil production in Kazakhstan reached a high of 1.71 million bbl/d, compared with 1.62 million bbl/d in 2009 (a 5.5% increase). Major producers include Tengiz, Karachaganak, CNPC-Aktobemunaigas, Uzenmunaigas, Mangistaumunaigas, and Kumkol, all of which account for 1 million bbl/d. Output solely from the country's three major fields (offshore Kashagan, onshore Karachaganak, and onshore Tengiz) is projected to grow to 1.2 million bbl/d by 2016.

The huge offshore Kashagan field, with an estimated 7-9 billion barrels of recoverable oil, was expected to come on stream by the end of 2013, however, a routine inspection of the gas pipeline, running from Island D to Bolashak Unit, revealed a gas leak. The Kashagan field was shut down for repairs and the oil production was suspended and has not been resumed since then. The commercial production at Kashagan is not expected to resume until 2016. Production will start after the 200 km pipeline is replaced. Kashagan is developed by North Caspian Operating Company (NCOC) as part of the North Caspian project. Its shareholders are Agip Caspian Sea B.V. (16.81%), KMG Kashagan B.V. (16.81%), ExxonMobil Kazakhstan Inc. (16.81%), Inpex North Caspian Sea Ltd. (7.56%), Shell Kazakhstan Development B.V. (16.81%), Total EP Kazakhstan (16.81%) and CNPC (8.4%).

Sub-Sector Best Prospects

Oil industry sources estimate that Kazakhstan could eventually attract up to $140 billion of foreign investment in its oil infrastructure. The market for oil and gas field equipment and services slowed in 2009-2010 due to the global economic crisis as well as cuts in capital expenditures by oil and gas exploration and production companies. Overall demand remains strong, however, with opportunities for U.S. companies in virtually every sub-sector associated with oil extraction, processing, and transportation. Best prospects include drilling, research and data management, laboratory studies, oil spill cleanup technologies, and pipeline equipment and services.

To date, Kazakhstan has no experience in offshore production and operations. This experience gap offers many opportunities for U.S. service companies in rig work, support infrastructure, and environmentally sensitive technologies. The Caspian Basin's oil-bearing formations are generally quite deep (15,000 feet), under considerable pressure, and often contain a high degree of sulfur and other contaminants, making special Western-made drilling and processing equipment necessary.

U.S. oil and gas field equipment suppliers have the potential for solid growth over the next decade as new fields are brought on-stream and secondary recovery methods are introduced to existing deposits. The most promising sub-sectors are the following: offshore/onshore oil and gas drilling and production equipment; turbines, compressors and pumps for pipeline applications; measurement and process control equipment for pipeline applications; industrial automation, control and monitoring systems for refineries, gas processing and petrochemical plants; seismic processing and interpretation; petroleum software development; sulfur removal and disposal technologies; well stimulation and field abandonment services.

There are significant opportunities for companies producing oil and gas field equipment and machinery such as drilling and wellhead equipment, Christmas trees, valves, pumps, motors, compressors, electrical submersible and jet pumps, underwater repair equipment, and oil spill containment equipment. Good prospects also exist for firms offering downstream engineering and services such as fabrication, welding, engineering services and testing in accordance with API and ASME standards.


The Government of Kazakhstan is pursuing a development program for oil fields in the Caspian Sea that calls for increasing oil production to about 3 million bbl/d, and for the development of terrestrial infrastructure. The offshore development program also calls for more new offshore blocks to eventually be privatized through open tenders. These future projects, combined with current production and exploration, should provide opportunities for interested U.S. exporters over the next few decades.

Web Resources

For more information contact Commercial Specialist Azhar Kadrzhanova.

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