Availability, reliability, competitiveness of energy supplies will remain the key energy policy factors

The XI Eurasian KAZENERGY Forum on "Creating the future energy" kicked off on September 7 at the Palace of Peace and Reconciliation in Astana. This Forum has become a key event of the international specialized exhibition EXPO-2017, which takes place in the capital of Kazakhstan from June to September this year.

The forum was organized by KAZENERGY Association with the support of the Government of the Republic of Kazakhstan.

The key speakers on the first day of the Forum included the Minister of Energy of the Republic of Kazakhstan Kanat Bozumbayev, President of the World Petroleum Council Tor Fjaeran, Secretary General of the International Energy Forum Dr.Sun Xiansheng, Minister of Energy of Georgia Ilya Eloshvili, Secretary General of the Energy Charter Urban Rusnak and others.

"This important in the energy community event continues the discussion of topics announced as part of the specialized exhibition EXPO-2017 “Future Energy” and of the Ministerial Conference "Ensuring Sustainable Energy Development". These events show Kazakhstan as one of the leaders in the global dialogue on the future energy," said the Minister of Energy Kanat Bozumbayev opening the Forum. "The ultimate goal of this dialogue is to identify specific steps towards achievement of the UN's sustainable development goals. The Declaration adopted after the June Ministerial Meeting, and the Resolution we will work out after this Forum, will be reflected in the proclamation of the EXPO values. This document will set a path for us in further development of the energy sector."

According to the Minister, the study "Forsyte-2050. The new world of energy and the place of Kazakhstan in it", conducted by the Kazakhstan’s Ministry of Energy jointly with McKinsey&Company, showed that today conventional fossil energy sources comprise 82% of the world energy balance, including oil (32%), natural gas (21%), coal (29%) and their derivatives. Alternative energy sources together constitute about 18% of primary energy consumption, among which the largest share (5%) is the nuclear energy. Relatively small shares are taken by solar and wind energy, 0.1% and 0.6% respectively. Most of the primary energy in the foreseeable future will come from conventional fossil sources. K.Bozumbayev noted that Kazakhstan is in the top 15 countries in terms of oil production, in the top 10 countries in coal production, and is the world leader in uranium mining and supply. The economy of Kazakhstan depends heavily on export of fuel raw materials. This makes our country quite sensitive to global changes in energy consumption. Despite the low prices, as he added, major projects (such as Kashagan, Karachaganak and Tengiz) are able to maintain the level of production and even increase it in the future.

At the same time, he assured that availability, reliability and competitiveness of any energy resource supply will still remain the key factors in our energy policy.

The First Deputy Minister of Energy of Poland Grzegorz Tobiszowski stressed the role of the European Union in ensuring energy security, noting that Poland, which he represents at the Forum, is one of the few European countries that can provide themselves with their own energy resources. Poland’s dependence on external supplies is just 20%, while in some EU countries it exceeds 50%. The country’s independence in this regard is ensured by large reserves of black and brown coal, which account for 60% of the energy structure.

"The availability and use of our own energy resources is a fundamental factor for the development of energy," he said.

In this sense, Grzegorz Tobiszowski made a comparison with the Kazakhstan’s energy sector, noting that the two countries need to develop the coal industry, with an emphasis on implementation of modernization programs. He expressed hope for further cooperation between Poland and Kazakhstan, taking into account the scientific potential in this field.

The similarity between the energy systems of Kazakhstan and another European country, the Czech Republic, was noted at the Forum by the Deputy Minister of Industry and Trade of this country, Jiří Koliba. The coal component in the energy sector is strong in both countries. "Energy without CO2 emissions is not only a popular trend, but also a necessity, without which there is no future," he said in this regard. According to him, the current share of coal generation in the Czech Republic is 60% of the total energy structure. 30% is nuclear power, and 10% is renewable energy.

The Minister of Housing, Energy and Environment of Finland Kimmo Tiilikainen, speaking about the energy market transformation and solutions to the problems in the industry, called on the energy community to unite. "The EU will increase the role of climate policy, but the EU cannot act alone. We need active climate diplomacy," he said at the opening of the Forum.

He noted the need for development of renewable energy, adding that success in this area can be achieved through joint actions of the government and private business.

Speaking about the Finland’s achievements in energy efficiency, the Finnish minister said that the electricity losses in the grids in his country are 3%, which is an impressive result in comparison with other countries.

Commenting on this result, the Deputy Chairman of KAZENERGY Association Dzhambulat Sarsenov said that "it is a benchmark Kazakhstan should strive to achieve".

The Georgian Minister of Energy Ilya Eloshvili said that the transition to the use of renewable energy sources is one of the priorities in his country. Therefore, reducing emissions from energy and cooperation with the EU are one of the priorities for the country.

According to the President of the World Petroleum Council Tor Fjaeran, fossil fuels will remain the key energy sources in the foreseeable future, and it will take decades for the world to make a transition to a new energy market format. In particular, "there will be no quick solution for transport" to shift to alternative fuel. In addition, according to him, the transition will require major investments, which becomes a problem due to economic crises.

The key event of the XI Eurasian KAZENERGY Forum was the presentation of the National Energy Report, held by the Chairman of the James Schlesinger Center for Strategic and International Studies (USA) Adam Sieminski. This report was prepared by KAZENERGY Association in conjunction with IHS Markit. It was based on the 2015 edition, but taking into account the new developments, goals and objectives identified by the Government of Kazakhstan, it is intended to provide a comprehensive picture of the current situation and prospects for development of the basic sectors of the Kazakhstan’s economy, which together make up the country's fuel and energy sector.

Presenting the report, A.Sieminski stressed that today Kazakhstan remains an attractive country for foreign investments into the oil and gas sector. He particularly noted the role of the Code on Subsoil, which is being developed, designed to strengthen the position in terms of attracting external capital for implementation of certain projects in the industry.

Speaking about the Paris Climate Agreement, A.Sieminski said that its implementation will not be affected even by the withdrawal of the world’s largest economy, the United States. At the same time, he recalled that in the United States there are cities and even states that are willing to continue the policy of energy efficiency and reduction of emissions to the atmosphere from energy activities.

He recalled Kazakhstan's commitment to reduce emissions by 15% from the level of 1990 and expressed the hope that our country will be able to achieve this goal.

The participants of the interactive discussion on "Energy Transition: Security, Availability and Sustainability", including Secretary General of the International Energy Charter Urban Rusnak, Secretary General of the International Energy Forum Sun Xiansheng, Deputy Chairman of KAZENERGY Uzakbay Karabalin and others, highly praised the National Energy Report. They noted the important role of Kazakhstan in ensuring energy security in the region and the willingness of our country to conduct a dialogue at different levels. In this regard, for example, the Secretary General of the International Energy Charter, Urban Rusnak, said that Kazakhstan is the real center for interaction of various countries in the field of energy. He stressed the importance of energy diversification processes in Kazakhstan, adding that this will ensure the country's success in the future.

During the program session on "Sustainable development of major oil and gas projects" held on the same day, its participants, including the heads and representatives of KazMunayGas NC JSC, Karachaganak Petroleum Operating B.V., NCOC, Shell, Eni and PSA, noted that the year 2017 is the anniversary of development of the giant Karachaganak and Kashagan fields. Stressing the significant role of these projects to the country's economy, they reported on plans of further fields capacity building to ensure energy security.

The global agreements on development of the Karachaganak and Kashagan fields were signed 20 years ago, in November 1997, as part of the visit of the President Nursultan Nazarbayev to Washington (USA). Thus, a new stage started in the economic development of independent Kazakhstan at that moment, largely determined by the oil and gas potential in the next two decades.

These mega-projects already cover all operational costs and bring profit to shareholders and the Republic of Kazakhstan. Expanding production at the fields will increase production of hydrocarbon raw materials in the country, bringing it to the world's top oil and gas producers. The high technological effectiveness and, thus, high cost of these giants, instability and low prices for oil at world markets and growing demand for hydrocarbons of the Caspian region from the world consumers make these projects vulnerable and stable at the same time. The issue of what Karachaganak and Kashagan will face in the foreseeable future, taking into account the new challenges in global energy, was discussed at this session.

The first day program of the Forum included sessions on "Integration of energy markets - challenges and prospects", which became a platform for sharing best practices and reviewing the prospects for development of a common energy market within the Eurasian Economic Union; "Available, reliable and sustainable energy sources", during which its participants recognized the importance of fossil fuels in the world's energy balance; "Efficiency and innovations: the key success factors of the global energy transition", the key discussion topics of which included the opportunities of innovative technologies that can change the energy consumption system.

On the same day, the Forum featured a presentation of the main achievements during the 20 years of CNPC’s activities in Kazakhstan, noting the important role of the Chinese National Petroleum Corporation in the development of the country's oil and gas complex.

The speakers noted that today CNPC is an important strategic partner of the Republic of Kazakhstan in the development of the oil and gas industry, which facilitates further deepening of economic cooperation between the two countries. The corporation’s achievements grow in proportion to the successes of the oil and gas sector and the national economy. Today the total CNPC’s investment in Kazakhstan's economy is estimated at almost 43 billion US dollars. The amount of taxes and duties to the budgets of all levels of the country has reached 42.5 billion US dollars. Not every company operating in the Kazakhstan's oil and gas industry can show such impressive results. China's investments have given a powerful impetus to the development of oil and gas fields in Aktobe region. Thanks to them, modern gas processing plants have been built, new oil and gas transportation infrastructure has been developed, several thousand jobs have been created, and the social sphere has been supported. Implementation of new projects with Chinese participation has provided access to the Kazakhstan’s oil and gas complex for local companies from related industries.

In addition, the first day of the XI Eurasian KAZENERGY Forum included a number of sub-forum events, such as the IX KAZENERGY Youth Forum Learning for Life, IX National Conference of the Extractive Industries Transparency Initiative, III Forum of the KAZENERGY Women's Energy Club "Women in Energy. Expanding the boundaries of the future". The extensive media program included a press conference with the participation of the Forum’s key speakers.

As usual, this year the Forum’s partners included major energy organizations, such as the International Energy Agency, the International Energy Charter, the International Energy Forum, the International Renewable Energy Agency and others.