KAZAKHSTAN - The Refineries.

The three refineries in Kazakhstan, built during the Soviet era, have a total capacity of 427,093 b/d. Two of them have been designed to process Russian crude oil supplied by pipeline from Western Siberia. But now other sources of supply are being used as well, because the government wants to reduce the dependence on Russia as rapidly as possible. It has no choice because of erratic Russian crude oil deliveries due to payment problems and congestion in Russia's pipeline system. Imports are necessary as two of the refineries are far from the oilfields which are concentrated in western Kazakhstan.

The government initially tried transporting some crude oil by rail to the refineries at Chimkent and Pavlodar but this proved to be too expensive. It then started work on building a 1,200-km pipeline from the western oilfields to the refineries at a cost of $1 bn. Work began in 1996 but since then progress has been slow because the government is carrying out the project without foreign help.

Currently the refineries are operating at well below their capacity. On July 22, 1998, then Power Industry and Trade Minister Mukhtar Ablyazov said the refineries were "on the verge of coming to a full stop". Indian Oil Corp., together with Engineering India Ltd., made a proposal in recent years to modernise the refineries. But this is one of several proposals which have yet to be followed up by the government.