Kazakhstan Authorizes Qazaqgaz to Proceed with Kashagan Gas Processing Plant Without Foreign Partner

Kazakhstan's Ministry of Energy has authorized state-run operator Qazaqgaz to move forward with the construction of a second associated gas processing plant at the Kashagan oilfield, despite failing to secure a strategic foreign partner for the project. The decision was announced on Friday following a meeting attended by ministry officials, Qazaqgaz executives, foreign shareholders of the Kashagan field, and Chinese building contractors.

Project Purpose and Capacity

The new facility is essential for boosting oil production at Kashagan, which is currently constrained by limited reservoir reinjection and gas processing capacity. The plant will process 2.5 billion cubic metres (Bcma) of associated gas per annum, removing poisonous and highly corrosive nitrogen sulphide to enable domestic consumption. Once completed, expected no earlier than 2031, it will allow oil production to increase from an anticipated 450,000 barrels per day (bpd) to over 500,000 bpd.

Background and Previous Partner Negotiations

Kazakhstan had been waiting since 2024 for Qatar's UCC Holding to decide on its participation as a partner and investor in the project. However, according to two Kazakh industry sources, UCC did not inform Qazaqgaz of a decision before a deadline that expired at the beginning of June. If UCC had opted in, it would have been responsible for selecting contractors for both the front-end engineering design (FEED) and engineering, procurement, and construction (EPC) phases. In anticipation of the delay, Qazaqgaz held preliminary talks with Chinese contractors to take over these roles.

Current Status and Contractor Approval

The Kazakh energy ministry has now approved a consortium of China National Chemical Engineering Sixth Construction Company (CC6) and China Wuhuan Engineering Corporation (CWCEC) to handle engineering and construction work for the future facility. Qazaqgaz will manage the construction and must report monthly to the ministry on project progress, milestones, and any issues to facilitate prompt resolution.

First Processing Plant and Shareholders

Qazaqgaz is currently managing construction of the first processing plant at Kashagan, a 1 Bcma facility that will enable oil production to increase to 450,000 bpd from the current 400,000 bpd. This plant is due to enter operation before the end of this year. Kashagan's shareholders include Eni, Shell, ExxonMobil, TotalEnergies, China National Petroleum Corporation, Japan's Inpex, and Kazakhstan's state oil and gas holding KazMunayGaz, all of whom were present at Friday's meeting.