Oil and Gas Problems in Kazakhstan

Kazakhstan's Oil Supply Chain Management Challenges Kazakhstan is blessed with rich oil saves, 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 raw petroleum is insignificant and a considerable part of that refining limit is outside the Republic; added to that, a large portion of the pipelines and processing plants to trade oil to worldwide markets are mutually overseen by the Republic and global companies (MNCs).Thus there are political, mechanical and money related dangers for the republic's oil gracefully chain. 14 Jay Nathan, The Peter J. Tobin College of Business, St. John's University As in other oil creating countries, Kazakhstan's oil industry incomes straightforwardly rely upon the overall costs for oil and oil items, in light of gracefully an d request; and incomes rely upon the expense of creation and moving the last item to clients (Rasizade, 1999). For Kazakhstan's oil gracefully chain, the physical dispersion foundation associating supplies of raw petroleum to treatment facilities and to the world markets through pipelines, has been testing and costly.Moreover, at present Kazakhstan is outfitted with just a couple ; processing plants and in this way the significant part of Kazakhstan's unrefined 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 way Kazakhstan needs to oversee political, specialized and money related dangers in the coordination of her oil gracefully chain (Gaudenzi and Borghesi, 2006; Lockamy and McCormack, 2004). In the time of fast innovative 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 continuing upper hand for every fruitful industry and organizations (Magretta, 1998). The goal of each gracefully chain, including the worldwide oil industry, is to amplify the general worth produced. The worth a flexibly chain creates [to an association, or to a nation] is the distinction between what the last item is worth to the client and the exertion the Introduction Kazakhstan has significant stores of oil; in any case, the nation faces a genuine detriment 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 unrefined petroleum, might be like that of most other oil delivering countries, its downstream cost, I. e. , transportation of raw petroleum to the treatment facility, refining and transportation to business sectors specifically, is all the more expensive (Sridharan, Canines and Patt erson; 2005). For Kazakhstan to ship the oil to world markets, the business needs to rely upon pipelines (Cavenagh, 1999) through different nations. Additionally, keeping up such an activity requires countless gifted laborers, yet Kazakhstan needs more of them.Kazakhstan's Oil Supply Chain Management Challenges 15 gracefully chain uses in filling the client's solicitation. For most business gracefully chains, worth will be firmly corresponded with flexibly chain gainfulness, the distinction between the income created from the client and the general expense over the flexibly 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. in light of processing plant gain {www. gravmag. com, 2006).It is critical to take note of that more prominent monetary prizes can be increased uniquely with very much coordinated worldwide oil flexibly chain the board. 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 quantities for Kazakhstan's oil course through A russian area. For instance, on December 25, 2000 the amount for Kazakhstan was set at 17. 3 million tons. The notice among Kazakhstan and Russia of October 9, 2000 sets the rule of â€Å"a single route,† whose sole administrator is the Kazakh Oil Company.Annual portions rely mostly upon the political relations between the two countries. Other than governmental issues, there is additionally a specialized hazard factor, I. e. , the serious extent of pipeline wear and decay, which may hamper the adequacy and nature of administrations gave to trading nations. Furthermore, the absence of legitimate support of these oil pipelines exists essentially because of the way that an enormous number of very much prepared nearby exper ts and designers 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 accurate) and the rest during the '80s {75 percent of the Eastern branch). Therefore, toward the year's end 2000, Oil creating nations and worldwide gracefully chains Energy makes the wheels of worldwide flexibly chains go round (Bud La Londe, 2006). A run of the mill oil gracefully 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 impa cts the cost of raw petroleum by setting creation quantities. The qualities {revenue openings) are included by preparing and artificially replacing the raw petroleum, which is called â€Å"refining. A 42-gallon barrel of unrefined 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 greases, lamp oil, black-top and petrochemical feed-stocks to make plastics. This signifies in excess of 42 gallons Supply chain the board has become a significant methods for supporting upper hand for every 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 established and that implies not just the hazard and cost of keeping up them would be big ger, yet additionally the circumstance presents genuine specialized issues too 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 land hydrocarbon saves, of which in excess of 200 million tons are extractable) and Kumkola (with 350 million tons of oil saves, 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. Right now, there are just three significant treatment facilities in Kazakhstan: Atyrau, Shymkent and Pavlodar (see Exhibit 2). Kazakhstan's Oil Fields and ProductionMangistau and Atyrau oblasts (territories) are the fundamental oil creating zones 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 locales, Aktyubinsk, Kzylorda and Zapadno Kazakhstanskaya, represent the rest of. Worldwide 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 Actual Deliveries min. tons Per month Design thousand tons Actual t housand 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 (an outside 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 household oil and supplies the western district; †¢ Shymkent was for the most part sold (95 percent) to private financial specialists in 1996. It forms committed rough from the locale (Kumkol, Aktyubinsk, Turkmen fields) and supplies the south, especially Almaty.Kazakhstan's Oil Production and Distribution Costs A huge 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 showcase is around 85 percent to the host nation and 15 percent to the oil organization. This proportion can be interpreted 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 when all is said in done oil organizations focus on this ratio.This number has varie