Oil and Gas Problems in Kazakhstan

Kazakhstan's Oil Supply Chain Management Challenges Kazakhstan is enriched with rich oil holds, which give a significant wellspring of incomes for stable financial development and improvement of the nation's expectation for everyday comforts. This paper tends to the test the Republic of Kazakhstan faces in dealing with its oil gracefully chain. The nation's ability for refining unrefined petroleum is insignificant and a significant segment of that refining limit is outside the Republic; added to that, the vast majority of the pipelines and processing plants to trade oil to worldwide markets are mutually overseen by the Republic and global partnerships (MNCs).Thus there are political, innovative and monetary dangers for the republic's oil flexibly chain. 14 Jay Nathan, The Peter J. Tobin College of Business, St. John's University As in other oil delivering countries, Kazakhstan's oil industry incomes legitimately rely upon the overall costs for oil and oil items, in light of gracefull y and request; and incomes rely upon the expense of creation and shipping the last item to clients (Rasizade, 1999). For Kazakhstan's oil gracefully chain, the physical dispersion framework interfacing supplies of unrefined petroleum to processing plants and to the world markets through pipelines, has been testing and costly.Moreover, right now Kazakhstan is furnished with just a couple ; treatment facilities and subsequently the significant part of Kazakhstan's raw petroleum is being refined in Russia. As of late, China has put intensely in the development of pipelines over the Republic of Kazakhstan to gracefully the expanded interest for oil in China. In this manner Kazakhstan needs to oversee political, specialized and budgetary dangers in the coordination of her oil flexibly chain (Gaudenzi and Borghesi, 2006; Lockamy and McCormack, 2004). In the time of quick mechanical turn of events and globalization. It is basic that each country adjusts to such an environment.Supply chain the executives has become a significant methods for supporting upper hand for every effective industry and organizations (Magretta, 1998). The goal of each flexibly chain, including the worldwide oil industry, is to expand the general worth produced. The worth a gracefully chain creates [to an association, or to a nation] is the contrast between what the last item is worth to the client and the exertion the Introduction Kazakhstan has significant stores of oil; nonetheless, the nation faces a genuine hindrance of not having any immediate access to the untamed ocean, as the Caspian Sea is landlocked.While her oil industry's upstream cost, I. e. , the expense for investigation, improvement and creation of raw petroleum, might be like that of most other oil delivering countries, its downstream cost, I. e. , transportation of raw petroleum to the processing plant, refining and transportation to business sectors specifically, is all the more exorbitant (Sridharan, Canines and Patterson; 2005). For Kazakhstan to move the oil to world markets, the business needs to rely upon pipelines (Cavenagh, 1999) through different nations. Likewise, keeping up such an activity requires an enormous number of gifted specialists, yet Kazakhstan needs more of them.Kazakhstan's Oil Supply Chain Management Challenges 15 flexibly chain exhausts in filling the client's solicitation. For most business gracefully chains, worth will be emphatically associated with flexibly chain productivity, the contrast between the income created from the client and the general expense over the gracefully chain (Chopra and Meindl, 2003; Lee, 2002; Cavinato, 2002). The Republic of Kazakhstan will do well to monitorâ€especially to support development †the general estimation of her oil gracefully chain in the coming years. on account of treatment facility gain {www. gravmag. com, 2006).It is imperative to take note of that more noteworthy monetary prizes can be increased uniquely with all around coo rdinated worldwide oil flexibly chain the executives. Oil Production Sharing Agreement and Risks in Kazakhstan The Ministry of Energy and Mineral Resources of Kazakhstan and the Ministry of Fuel and Energy of Russia, intermittently set portions for Kazakhstan's oil course through A russian area. For instance, on December 25, 2000 the portion for Kazakhstan was set at 17. 3 million tons. The notice among Kazakhstan and Russia of October 9, 2000 sets the guideline of â€Å"a single route,† whose sole administrator is the Kazakh Oil Company.Annual quantities rely for the most part upon the political relations between the two countries. Other than legislative issues, there is additionally a specialized hazard factor, I. e. , the serious extent of pipeline wear and crumbling, which may hamper the viability and nature of administrations gave to trading nations. What's more, the absence of legitimate upkeep of these oil pipelines exists essentially because of the way that an enormou s number of all around prepared neighborhood experts and architects who are required are not accessible to day (Doing Business with Kazakhstan, 2004).Kazakhstan's oil pipeline frameworks were worked during the '70s {more than 60 percent of oil pipelines of the Western branch, to be definite) and the rest during the '80s {75 percent of the Eastern branch). Consequently, toward the year's end 2000, Oil creating nations and worldwide flexibly chains Energy makes the wheels of worldwide gracefully chains go round (Bud La Londe, 2006). A common oil flexibly chain starts with the raw petroleum maker, next, the oil moves to the purifier, the transporter, the retailer lastly to the gas siphon where a client gets the product.The top world oil makers are Saudi Arabia, Russia, the United States, Iran, Mexico, China, Canada, United Arab Emirates, Venezuela, Norway, Kuwait, Nigeria, Brazil, Kazakhstan and Iraq. The Organization of the Petroleum Exporting Countries (OPEC) controls significant raw petroleum supplies to the world. OPEC impacts the cost of raw petroleum by setting creation quantities. The qualities {revenue openings) are included by preparing and artificially replacing the unrefined petroleum, which is called â€Å"refining. A 42-gallon barrel of raw petroleum makes around 19 1/2 gallons of gas, nine gallons of fuel oil, four gallons of stream fuel and 11 gallons of different items, including ointments, lamp oil, black-top and petrochemical feed-stocks to make plastics. This indicates in excess of 42 gallons Supply chain the executives has become a significant methods for continuing upper hand for every single fruitful industry and organizations. Kazakhstan's Oil Supply Chain Management Challenges 16 55 percent ofthe pipelines were 10 to 20 years of age and 12 percent had been utilized for in excess of 30 years.Only 1 percent has been utilized for under 10 years. As time passes by, those pipelines are getting considerably more seasoned and that implies not ju st the hazard and cost of keeping up them would be bigger, yet additionally the circumstance presents genuine specialized issues also for the Republic of Kazakhstan {Petroleumjournal. com, 2006). type of joint endeavors, creation sharing understandings and investigation/field understandings. Oil is recuperated from 55 fields. The biggest of these fields are: Tengiz (somebody billion tons of anticipated oil holds); Karachaganak (340 million tons in oil saves, mutiple. billion tons in gas condensates and mutiple. 3 trillion cubic meters of flammable gas); Uzen (with more than 1. 5 billion tons of topographical hydrocarbon saves, of which in excess of 200 million tons are extractable) and Kumkola (with 350 million tons of oil holds, of which 80 million tons of oil and 75 billion cubic meters of petroleum gas are demonstrated). The Caspian and Aral Sea rack additionally contain noteworthy stores. As of now, there are just three significant treatment facilities in Kazakhstan: Atyrau, Shy mkent and Pavlodar (see Exhibit 2). Kazakhstan's Oil Fields and ProductionMangistau and Atyrau oblasts (territories) are the primary oil creating regions in Kazakhstan (see Exhibit 1). They represent in excess of 70 percent of the all out oil separated in the Republic. The other three extricating districts, Aktyubinsk, Kzylorda and Zapadno Kazakhstanskaya, represent the rest of. Universal oil ventures have taken the Exhibit 1: Production (in thousand tons) by areas 1998 Crude oil, thousand tons Aktubinskaya Atyrauskaya Zapadno-Kazakhstanskaya Kyzylordinskaya Mangistauskaya 23,818. 7 2,640. 8 11,135. 1 3,007. 8 7,035. 0 1999 26,735. 8 2,326. 7 12,359. 3 3,928. 8,121. 7 2000 30,647. 9 2,701. 1 13,422. 0 13. 5 533. 8 9,173 2001 36,060. 0 3,405. 3 15,589. 5 49. 4 6,172. 8 10,843. 0 Source: National Statistics Agency of Kazakhstan, 2005 Kazakhstan's Oil Supply Chain Management Challenges 17 Exhibit 2: Design and Delivery Capacities of Major Refineries Plant Design Capacity m In. tons Act ual Deliveries min. tons Per month Design thousand tons Actual thousand tons Per day Design thousand tons Actual thousand tons Shymkent Oil Refinery PavlodarOil Refinery Atyrau Oil Refinery 6. 5 3. 6 2. 3 590 326. 8 189. 5 245. 4 19. 7 22. 6 14 10. 9 6. 3 7. 5 4. 677 418 2. 7 8. 2 Source: National Statistics Agency of Kazakhstan, 2005 †¢ Pavlodar (a remote speculator was given an administration concession in 1997; the plant has been under government control since summer 1999) forms principally light unrefined from Siberia and supplies the northern area of Kazakhstan; †¢ Atyrau has a place with Kazakhoil, preparing substantial local oil and supplies the western district; †¢ Shymkent was for the most part sold (95 percent) to private financial specialists in 1996. It forms devoted rough from the area (Kumkol, Aktyubinsk, Turkmen fields) and supplies the south, especially Almaty.Kazakhstan's Oil Production and Distribution Costs A large number of various plans exist for separating oil incomes between the host nation and the outside accomplice. The typical objective for conveyance of income from creation to advertise is around 85 percent to the host nation and 15 percent to the oil organization. This proportion can be translated in a wide range of ways with various sorts of legally binding structures; it additionally relies upon the host nation's laws and inclinations, yet as a rule oil organizations focus on this ratio.This number has varie