The sector is boosted by key projects such as the launch of oil production at the Kashagan field expected in the fourth quarter of this year.

Production of oil and gas equipment reached KZT5bn in January-July 2016 against KZT2.7bn in the same period of last year. Growth stood at 82.5% against a fall of 6.4% year on year in the first seven months of 2014.

Generally, the ongoing crisis in the economy had a palpable impact on the sector as the 2015 output was 42.1% below than in 2014*. Earlier robust annual growth was recorded – 20% in 2014 and 24.1% in 2013.

However, the current growth trend may turn into significant gains in 2016. In addition to Kashagan, the development of the sector will also be boosted by the expansion of the Tengiz project and increase in output at the Karachaganak field.

Events: The replacement of pipelines at Kashagan is underway ahead of schedule as production at the field is expected to start in October 2016, Deputy Energy Minister Magzum Mirzagaliyev told the Oil Refinery and Petrochemistry in Central Asia conference in Astana. The official noted that the agreement with consortium participants did not mean some fixed date but it was expected that this would happen in the fourth quarter – approximately in October.

The need to launch production at Kashagan within the set timeframe was prompted by Prime Minister Karim Massimov’s orders to increase oil output from 74m to 75m tonnes this year.

^{*calculations use preliminary data for 2015. This figure may change after the State Statistics Committee publish the final data.}

Production of equipment for the oil refining and producing industry is one of 14 key aspects of a state programme for industrial-innovative development in 2015-2019 (the so-called second five year of industrialisation).

According to the programme, the sector is expected to implement priority projects to produce progressive cavity pumps, superheavy equipment and bulky containers, isolation valves and other oil and gas equipment in Almaty and Atyrau, West Kazakhstan, Mangistau, North Kazakhstan and South Kazakhstan Regions.

In addition, the programme aims to attract foreign investors and boost cooperation with multinationals.

Events:

A plant to produce oil pipe with premium connections has been presented in Mangistau Region. The enterprise is located in the Aktau Seaport special economic zone. The technology is about innovating threading. The construction of the plant with a capacity of 45,000 tonnes of pipes a year started in 2015. The project’s total cost is KZT12bn. This is 100% investment from Italy’s Tenaris company. The plant employed 80 workers at the launch and will employ 120-130 people when it reaches full capacity, out of whom 80% will be local specialists and 20% specialists from Tenaris.

The Aktobe plant of oil and gas equipment plant to expand into new foreign markets in Russia, Iran and Turkmenistan. It also plans to expand its product range, the plant’s general director, Gasal Musin, said during President Nursultan Nazarbayev’s visit to the plant. Earlier with support from the Damu fund, a subsidiary of the Baiterek national holding company for managing development institutions, the Aktobe plant acquired an automated line to process the ends of barbells with a feeding robot, conservation unit and assemble ready-made sets. The enterprises is the only producer of pump rods and accompanying equipment, compressing-pumping pipes and so on in Kazakhstan and provides for over 80% of the country’s market and exports its products to Uzbekistan.

^{The analysis uses material published on www.kapital.kz, www.khabar.kz, www.damu.kz and www.baiterek.gov.kz websites.}