Central Asia comprises of Kazakhstan, Turkmenistan, Uzbekistan, Afghanistan, Tajikistan, and Kyrgyzstan. Kazakhstan is the main oil producer in the region, while the rest of the region mainly produces gas led by Turkmenistan and Uzbekistan. As of 2019, the total proved reserves in the region are 31.4 billion barrels of oil and 825.8 trillion cubic feet of gas. A little over 95% of the region’s oil reserves and 83% of the gas reserves are in Kazakhstan and Turkmenistan, respectively.
Oil and gas production in the region have grown at 2.7% and 0.2% per year, respectively, in the past five years as shown in Exhibit 1. Although Kazakhstan produces some gas, most of it is re-injected to enhance oil recovery locally. On the contrary, most of the gas produced by Turkmenistan and Uzbekistan is exported to China, Russia, and Azerbaijan. The produced gas can also be exported to neighboring countries in Europe such as Turkey and Georgia and to India and Pakistan in Asia.
Exhibit 1. Oil and gas production in Central Asia over 2015 to 2019 in thousand barrels of oil per day and billion cubic feet per day. Source IEA
In the recent years, both export demand and E&P investments have slowed down in the region due to low oil prices and oversupplied oil and gas markets. Cost-competitive gas supply options such as LNG from the Middle East, United States, and Australia to Europe and South Asia are among the factors that have impacted planned pipeline projects and slowed down construction of some projects. The 56 in. diameter TAPI (Turkmenistan – Afghanistan – Pakistan – India) and 42/48 in. diameter Turkmenistan – China gas pipeline (Line D) are examples of pipeline projects that have been under construction for a long time. As a result of slowing export demand, the region led by Uzbekistan and Kazakhstan are planning to invest in and develop domestic petrochemical industry. Global oil and gas demand growth is rapidly fragmenting driving interest in understanding various regional markets at a granular level. ADI recently helped a client understand the oil and gas industry in Central Asia with an assessment of upstream and midstream outlook. Contact us for similar in-depth profiles of regional oil & gas markets and how we can help you with prospective opportunities in various regions.
By Panuswee Dwivedi and Uday Turaga
