Chemical and Petrochemical Industry

An Expert's View about Energy in Kazakhstan

Last updated: 20 Apr 2011

Summary
• Kazakhstan has seen GDP growth of 8.3% in the first half of 2010, despite modest average forecasts of 3%
• It is one of the top oil and gas producers internationally, and the GDP growth outperformance is driven largely by its oil and gas and mining industries that saw stable global demand and healthy prices
• Chemicals, plastics and rubber exports from Kazakhstan are currently at 4.1 %, with 10.7% of the products being imported of the overall foreign trade volume
• Chemicals and plastics represent only about 4% of industrial output and around 1% of the country’s GDP with potential for significant increases in the future
• Local production of plastics and rubber has decreased by 7.7% in 2009 and chemical production reduced by 23.7%, which reflected the worldwide trend induced by the economic crisis
• Kazakhstan is endowed with considerable hydrocarbon reserves. However, until recently, oil refining and petrochemistry were relatively ignored, with most projects revolving around upstream exploration and production.

Market Demand
The key players in Kazakhstan’s petroleum sector are facing high and constant demand for chemicals in order to support their projects and are seeking to facilitate the development of Kazakhstan’s chemicals market through the increased involvement of a wide range of local and international chemical product suppliers.

Realizing the immense potential that lies in refining, petrochemistry and other value-added activities, the Government has set forth major development plans attempting to boost its chemical industry. Kazakhstan is planning to invest more than $9 billion in the industry in the period from 2011 to 2015. These funds will be invested in different projects under the Chemical Industry Development Plan for 2011-2019.

Chemicals and plastics represent only about 4% of industrial output. Despite this, Kazakhstan is already a significant provider of polystyrene (PS), procured from facilities near the city of Aktau on the Caspian coast. Natural gas from the new Kazakh fields is going be processed into ethylene and propylene, allowing the country to eventually become a significant producer of polyethylene (PE) and polypropylene (PP).

Kazakhstan’s plastics and rubber industry is underdeveloped with the local companies seeking raw materials, supplies and equipment and machinery to fill in the missing chemicals and reagents from abroad. Quality packaging materials, recycling equipment and machinery, extrusion equipment, polymerization materials, polypropylene are all demands from small and medium enterprises and production facilities in Kazakhstan.

With its own production within the chemical industry remaining very small and accounting only for about 0.6% of Kazakhstan’s GDP, most of the country’s chemical and pharmaceutical needs have to be imported from abroad.

Market Data
sector has gradually started recovering, though the recent ource: Kazakhstan Statistics Agency , 99 were identified in the country, 78 of hich were explored, and more than 60 are used in production. of 2009. The share of chemical industry in the overall industrial production is approximately 1.5%. After the dissolution of the Soviet Union, heavy dependence on imported raw materials, coupled with the insolvency crisis, initiated a deep recession in the Kazakh petrochemical industry. High transportation costs, insufficient use of local resources, and increased competition from abroad made it difficult for the companies to stay in business. However, the financial crisis has undermined performance.

The chemical industry is based on rich resources of phosphorites in southern and western Kazakhstan, utilization of sulphur dioxide produced by the metallurgical industry and rich resources of salts in northern and southern Kazakhstan. Out of 110 existing chemical elements, 99 were identified in the country, 78 of hich were explored, and more than 60 are used in production.

In 2009, the industry saw a decline from 2008 with the volume of production decreasing by 25%. The situation improved by October 2010 with production output increasing by 36% compared to the corresponding period of 2009. The share of chemical industry in the overall industrial production is approximately 1.5%.

The structure of the chem sub-sectors producing:
1) mineral fertilizers (phosphorous, nitrogen, complex);
2) inorganic chemistry products
3) lacquers and paints
4) explosives;
5) plant protection products;
6) organic chemical products;

Read the full market research report


Posted: 20 April 2011, last updated 20 April 2011

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