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Kazakhstan’s oil industry explained

Straddling Eastern Europe and Central Asia, the former Soviet republic of Kazakhstan is the ninth-largest country in the world by area and the largest landlocked country. It boasts a wealth of mineral resources—including uranium, chromium, manganese, copper, zinc, gold, and diamonds—but its substantial oil and gas reserves are mostly responsible for making it the dominant economy among the Central Asian nations.

Kazakhstan currently has proven oil reserves of 30,000 MMbbl (millions of barrels), but the country’s oil resources were barely explored during the Soviet era. According to some experts, there may be over 124,000 MMbbl of hydrocarbon reserves in the Kazakh portion of the Caspian Sea.

Kazakhstan officially became an oil producer in 1911, but production was never at a meaningful level until the 1960s and 1970s under the Soviet Union, with oil production peaking at just under half a million barrels a day before independence. Many of the country’s oil fields are located deep down or otherwise problematic to access, so the Soviets deemed them prohibitively expensive to develop.

Since declaring independence from the Soviet Union, Kazakhstan has greatly increased its oil production,with the help of international oil companies. For example, ExxonMobil, the manufacturer of slideway oils like Mobil Vactra 2, is involved in the development, production, and transportation of the country’s oil and gas resources. With their substantial financial and technological resources, these companies have managed to develop fields that were previously thought to be unfeasible.

Offshore exploration of the Caspian Sea presents the greatest opportunity to increase oil production in future, but an ongoing point of contention is whether the Caspian Sea should be classed as a lake or an inland sea. This distinction determines the distance that each country controls its coast. For example, a sea is usually divided according to median lines with each country having an economic coastal zone 200 nautical miles from the shore, with territory being divided equally when it would overlap with another country’s coastal zone. With a lake, the coastal zone would be reduced to 50 nautical miles, leaving a large area in the middle under joint control.

While Kazakhstan is currently participating in the OPEC-led production cuts, it clearly has scope to increase production in future. What’s more, despite being landlocked and distanced from international energy markets, a pipeline system enables oil and gas to be exported directly to meet demand in Europe and China.

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