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研究ノート

The Development of Nuclear Energy in Kazakhstan
and its Integration to the Country’s Energy Sector
Aliya Tskhay

Kazakhstan has one of the largest reserves of energy resources in theworld. However, despite the sizable gas, oil and coal production, the country
is currently importing electricity from neighboring states to respond to its
energy production shortage. The Kazakh government has expressed its desire
to develop nuclear energy with the consequent establishment of full nuclear
fuel cycle by 2014 (Government of Kazakhstan, 2010). In this scenario, energy
security has become a key element to respond coherently to the current energy
situation and the governmental strategy for the future of the country.
The objective of this paper is to examine the integration of nuclear energy
into Kazakhstan’s energy sector. For this purpose, it will present an overview
of the energy sector of Kazakhstan. This synopsis will include the identificationof the major energy resources and challenges of the sector, as well as the stagesof nuclear energy development as laid out by the Kazakhstan’s governmentplan. Furthermore, this paper will present an analysis of the nuclear energy’s
position in Kazakhstan’s energy sector to provide a short evaluation of its
efficiency and ability to meet the country’s growing energy demand.

1．Overview of Energy Sector in Kazakhstan
Kazakhstan is rich in energy reserves, particularly of oil and coal. It is the
major oil producer in Central Asia and one of the top 10 states in oil reservesworldwide. Its output in 2007 was calculated to be 1.3 million barrels per day(International Energy Agency, 2011) (Dorian, 2005). The oil proven reserves of
the country are estimated to be 39.6 billion barrels (Kaiser, Pulsipher, 2006).
Consequently, the share of oil and gas sector in the Kazakhstan’s GDP was
estimated to be around 30% (Kaiser, Pulsipher, 2006). The state invests $4-5
billion into the oil industry annually (Kaiser, Pulsipher, 2006), which indicatesthe importance of the energy sector in Kazakhstan’s economy as well as the110

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prospective of a sector which is still under development. The major oil fields of
Kazakhstan are Tengiz, Karachaganak, Kashagan and Kurmangazy, with thelatter being still under exploration (Kaiser, Pulsipher, 2006).
The country’s gas sector is similarly significant, and includes 83 depositsof natural gas, with 17 of them being exclusive gas reserves and with overallgas reserves estimated to be 1.90 tcm (Dorian, 2006). Natural gas is unevenly
distributed around Kazakhstan, with 40% of the reserves being located in
Karachaganak field (Kaiser, Pulsipher, 2006). The scattered location of gas
reserves is a major challenge for its distribution, for instance, having major
gas fields in the Western part of the country and the most demand in theSouth (Kaiser, Pulsipher, 2006). As a result, Kazakhstan has been forced toimport gas from Uzbekistan and Turkmenistan, while having enough domestic
reserves of natural gas, which it is unable to distribute efficiently.
Kazakhstan has 37 coal reserves and is a major coal producer in Central
Asia (Dorian, 2006). As in the case of natural gas, coal deposits in Kazakhstan
are located far from industrial facilities and concentrated in specific parts of thecountry, particularly in central region (Dorian, 2006). However, in comparison
to natural gas, coal is the major fuel for electricity production in Kazakhstan,being used in the heat-and-power plants that are located around the country.
In general, the energy sector in Kazakhstan is based on the production ofcoal, oil and gas, but due to the geographical location of the energy resources
and poor transportation system the country has restricted capabilities toprovide energy for its population, particularly in the form of electricity. The
country’s deficit of electrical power has pushed the country to implement a
strategy of energy import from the neighboring countries. As a response tothis, the government of Kazakhstan is searching for the alternative supplies ofelectrical power, to meet the demand in its Southern region.

2．Challenges of Kazakhstan’s Energy Sector
The energy sector of Kazakhstan faces significant structural and technicalchallenges. According to Ordabayev (2010), many of the energy generation
related problems are linked to the outdated facilities, the lack of modern
technological equipment in electricity generation plants and the expiration of
the exploitation period of those facilities. Thus, 41% of electricity generating

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facilities has been working for over 30 years, contrasting with the standard
period of exploitation in developed countries which is set to a maximum of 5-7
years (Ordabayev, 2010). Aside from that, there is high rate of overexploitationof electrical networks up to 65-70% (Ordabayev, 2010). The exhaustive use of
the electrical equipment leads to the high frequency of industrial accidents andpower blackouts (Ordabayev, 2010). As a result, the inefficient and irregularenergy supply has weakened the energy sector of the country. This situation
poses an important threat to the energy security of the country.
Another challenge of the energy sector is the insufficient use of renewable
and hydropower sources of energy in Kazakhstan (Ordabayev, 2010). The useof hydropower, in particular, is expected to cover the need for electricity in peakseasons (Ordabayev, 2010). So far, the use of renewable energy in Kazakhstan
is estimated to be around 0.5% (Raimkulov, 2011). This figure is projected to
become more than 1% and expected to generate annually up to 1 bln kWt/h by
2014. Furthermore, the state programs aim to increase the share of renewableenergy up to 3% by 2020 (Raimkulov, 2011). The considerable amount of CO2
emissions resulting from the heat-and-power plants, and the impact of thoseemissions in climate change should encourage the country to reconsider theuse of heat-and-power facilities and focus on environmentally friendly options
to energy production. Such strategy would satisfy the regulations stipulated in
Kyoto protocol and help face the energy production challenges of the country ina sustainable manner.
Kazakhstan’s challenge of balancing the unevenly distributed energy
resources availability and production is also a key factor for achieving energy
security. This particular problem is partly a result of the legacy of the former
Soviet energy network. Responding to the energy unbalance, where 42% ofelectrical power being generated in Pavlodar oblast in the north of Kazakhstan(Ordabayev, 2010) and the largest demand for electricity comes from Almaty
and other southern regions, will significantly improve the efficiency of theenergy sector of the country. Taking into consideration all mentioned challengesof the energy sector, the government of Kazakhstan has implemented several
state programs to address them (Raimkulov, 2011). The development of energy
sector plays a significant role in the strategies included within the state
program for rapid industrial-innovative development in 2010-2014. In the 5
years included in this program, more than 320 investment projects will be112

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established. The outcome is expected to be the generation of 97.9 bln kWt/h torespond to a demand of 96.8 bln kWt/h (Ordabayev, 2010).
While energy security is already being taken into account by thegovernmental planning for the country modernization, it is still necessary tounderstand the factors that are needed to prevent large-scale power blackouts
and energy deficit. Thus, the next sections of this paper will explore how
nuclear energy development can be incorporated into the energy sector andwhether it can meet the challenges of it or not.

3．The Development of Nuclear Energy in Kazakhstan
The nuclear energy sector in Kazakhstan has a long history starting fromthe Soviet Union, when the industry was established and Kazakhstan was thebase for the uranium production and nuclear tests and research. From the late1980s and to early 2000s the nuclear industry in Kazakhstan experienced adownfall of uranium production and an overall crisis of industry (Kazatomprom,2011). The extraction of uranium in Kazakhstan fell from almost 4,000 tonnes
to 900 tonnes during the period from 1990s to 1997 (Kazatomprom, 2011). The
managing company of nuclear industry in Kazakhstan, which was Kazakhstan
State Atomic Power Engineering and Industry Corp (KATEP) with 51% ofshares owned by the state, was not able to sustain efficient management of theindustry further on (Caroll, 1997).
Precisely at this point the government of Kazakhstan decided to pay
attention to the problems of the nuclear industry and try to revive it. In 1997
by the Decree of the President of Kazakhstan the National Atomic Company,
Kazatomprom, was established with the main goal to restore and develop
nuclear industry in Kazakhstan (Nazarbayev, 1997). Kazatomprom took controlof the former KATEP and its associated companies as well as its financial
burdens. The decree emphasized the importance of the atomic industry for thedevelopment of the country and thus became one of the strategic interests ofthe country. Kazatomprom was declared a 100% state-owned company whichshould deal with exploration, research, mining, export and trade of uranium,
operating nuclear power plants, and to cooperate with the industries andcompanies involved in the nuclear industry field (Nuclear Threat Initiative,2003). The company faced numerous challenges in the Kazakhstan’s nuclear

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industry. As mentioned before, the decrease in uranium production wasobserved parallel with the uranium price depreciation in the world markets,
the stagnation of atomic industries in the partnering countries, especially in
Russia, and outflow of specialists (Nuclear Threat Initiative, 2003). Moreover,the company acquired the dramatic situation of the previous nuclear industry
company which was significantly indebted to the employees and foreignbanks (Kazatomprom, 2011). In order to solve the above-mentioned issues
Kazatomprom developed a strategic plan of actions with the main goal to revive
the nuclear industry in Kazakhstan (Kazatomprom, 2011).
From 2000s Kazatomprom started consistent policy for the reconstructionof the nuclear industry in Kazakhstan. Getting the financial credits, company
was able to cover the debts and financing of production was provided(Kazatomprom, 2011). Moreover, Kazakhstan got access to the US andEuropean uranium markets ending the restrictions on Kazakh uranium due
to legal anti-dumping charges. The production of uranium in Kazakhstan has
increased and the country was ranked sixth in terms world’s uranium output
in 2000 (Kazatomprom, 2011).
Achievements in nuclear industry in previous years considered, the periodof 2001-2002 could be viewed as a post-crisis period for the nuclear energy
sphere in Kazakhstan (Kazatomprom, 2011). Kazatomprom signed agreements
and got access to uranium market of China and South Korea. The production of
uranium was continuously increasing and thus the transfer of new technologies
was needed. Kazakhstan was able to obtain new drilling machines for theuranium mining, which resulted in more efficient exploration and exploitationof the mines.
In 2004 Kazatomprom declared a strategic plan of achieving “15,000 tonnesof uranium production in 2010” in World Nuclear Association symposium(Dzhakishev, 2006). The establishment of new uranium mines contributed tothe development and growth of nuclear industry in Kazakhstan. From 2003
to 2006 Kazakhstan was expanding and deepening cooperation with foreigncountries, like Japan, China, and Russia, in the nuclear industry sphere.
In 2008 the idea of the full nuclear fuel cycle in Kazakhstan started totake its shape by the signing of international agreements of Kazatomprom.
On June 11, 2008 Kazatomprom signed a significant agreement with French
company Areva for nuclear fuel cycle development. The contract established a114

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joint venture Katco (51% Areva and 49% Kazatomprom) in production of 4000
tonnes of uranium up to 2039, which would be sold by Areva (World Nuclear
News, 2008). Moreover, the agreement also stipulated the production of 1200
tonnes of uranium in Ulba Metallurgy Plant for the fabrication of nuclear fuelpellets, among which 400 tonnes would be used for French nuclear reactors(on the basis of Kazatomprom 51% and Areva 49%) and 800 tonnes used by
Kazatomprom entirely (Kazatomprom, 2011). This agreement signified thecommitment of Kazakhstan to establish transnational vertical integrated
company for the nuclear fuel cycle.
Kazakhstan was able to develop nuclear industry field to the competitive
level in global market in the short period of time. Within 8 years national
company Kazatomprom not only revived the nuclear industry from thecrisis but became the one of the key players in the sphere of global uranium
production. This result could not be achieved without the consistentcommitment and strategic plan of action from Kazakh government as well as
foreign investments. After the collapse of the Soviet Union and first decadeof independence the main strategy of Kazakhstan in general and nuclear
industry, in particular, was to overcome the crisis and stagnation. The future
strategic goals for the country would be to achieve industrial and economic
development and play a leading role in nuclear industry.

4．Future Prospects in Nuclear Energy Development in Kazakhstan
In 2010 government of Kazakhstan has issued a state program on“The development of nuclear industry in Kazakhstan from 2010-2014 withprospects for 2020” which has laid out crucial aspects of growth of the industry(Government of Kazakhstan, 2010). The commitment of the government todevelop and secure the position of Kazakhstan as a world’s important player inuranium production sphere was emphasized by Kazakh high officials. Presidentof Kazakhstan Nazarbayev has emphasized in his annual messages to thepeople of Kazakhstan to make a target of achieving rapid industrial growthand economic prosperity (Akorda, 2011). The administration of Kazakhstan has
developed strategic plan of development “Kazakhstan-2030,” additionally theplan Kazakhstan-2020 of economic development of the country were proposed.
Nazarbayev in 2006 has put a target for Kazakhstan to be on the list of the 50

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most competitive countries in the world. However, for the fulfillment of all the
proposed plans for modernization and industrial growth the huge supplies ofenergy resources are needed.
In 2009, as was expected and planned by the government, Kazakhstan
became the world’s largest uranium producer with 28% of world production.
However, it is not the ultimate level that Kazakhstan can achieve.
Kazatomprom expressed their willingness to increase this figure up to 30%
of world’s production by 2015 (Kazatomprom). Kazakhstan was consistently
increasing the production of uranium from 2001 to 2009 starting from 2000
tonnes to 14,020 tonnes of uranium per year (WNA, 2010). The target of
becoming the world’s largest producer of uranium was achieved due to the
exploration and construction of new mines upgrade and extension of nuclear
fuel production (Vinokurov, 2008). Consequently, the ambition of becoming thelargest uranium producer was fulfilled in the matter of 10 years.
The next step of Kazakhstan in the development of nuclear energy is toestablish full nuclear fuel cycle on its territory in order to become independent
from Russia. Currently, Kazakhstan is operating uranium mining and fuelpellets production on its territory, while conversion and enrichment, as
well as fuel rods production is made in Russia. The issue of Kazakhstan’scommitment to nuclear nonproliferation and financial constraints of developing
all the facilities for full nuclear fuel cycle in the recent time made it easierfor Kazakhstan to collaborate with Russia (Kassenova, 2008). The prospect
is to establish common enrichment facility with Russia which could be usedby Kazatomprom, with the restriction for Kazakhstan’s experts’ access toenrichment technology but to operate the process itself (Kassenova, 2008).
Furthermore, Kazakhstan and Russia are promoting the use of International
Uranium Enrichment Center (IUEC) in Angarsk, Russia for the access tonuclear fuel by other countries.
It is necessary to mention that Kazakhstan is collaborating with Russia
on nuclear fuel cycle stages, although it is also diversifying its partners in
the nuclear energy sphere. For instance, Kazatomprom bought 10% share ofWestinghouse Electrics, leading nuclear reactors producer, in 2007 (Vinokurov,
2008). From this deal, Kazatomprom gained access to world’s nuclear fuelmarkets as well as technical assistance in the production of fuel assemblies(Kassenova, 2008).

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Kazakhstan is actively negotiating with Japan on nuclear fuel exports, notonly of uranium, but also fabricated fuel assemblies (WNA, 2010). Kazakhstan
would like to supply 40% of the Japanese need for natural uranium andfabricated fuel from 2010 (Muzalevsliy, 2010). Japanese partners are engaged
not only in the uranium exports agreements, but also technical assistance to
the National Nuclear Center and research conduction of the feasibility of thenuclear energy sector development in Kazakhstan (WNA, 2010).
In addition to Japan, the cooperation of Kazakhstan with China in thefield of nuclear industry is also increasing and developing. In 2006 China’s
Guangdong Nuclear Power Group Holdings (CGNPC) signed an agreementwith Kazatomprom for the Chinese participation in Kazakh uranium mining
projects and Kazakhstan’s investment to China’s nuclear industry (WNA,
2010). This agreement makes Kazakhstan the main supplier of uranium to
CGNPC, overtaking French company Areva and starting selling to China
nuclear fuel by 2013 (Kassenova, 2008).
The other strategic purpose of nuclear energy development is to produce
domestic nuclear power and meet the needs of electricity demand. From 1973
to 1998 Kazakhstan had operated the only nuclear reactor in Aktau which
was dedicated for water desalination and electricity generation (Governmentof Kazakhstan, 2002). Since the date of exploitation has been expired, in 1998
the reactor was closed, from that time Kazakhstan did not operate any nuclear
reactors on its territory. However, for the full realization of nuclear energy
development it is required to start constructing and operating at least one
nuclear power plant. The project is to start construction of nuclear power plantin Aktau in 2011 based on the Russian type of nuclear reactors (WNA, 2010).
The nuclear power plant in Aktau is supposed to meet the energy needsof the western part of Kazakhstan which is now reliable on the supply ofelectricity coming from Uzbekistan (Kassenova, 2008). There are also projects
to build nuclear power plants near Lake Balkhash for the electricity supply to
Almaty city (WNA, 2010). The poor supply of electricity and increasing demand
for this city makes energy supply a major concern for government officials. Onlyin the southern part of Kazakhstan the deficit in electricity will be 1.9-2 bln
kWt per hour by 2030, notice this figure will be achieved with the introductionof new South-Kazakhstan State District Electrical Plant (Government of
Kazakhstan, 2002). 80% of the electricity sector of Kazakhstan is dependent

The Development of Nuclear Energy in Kazakhstan and its Integration to the Country’s Energy Sector 117

on the heat-and-power plants, which cannot meet the domestic demand forthe energy (Vinokurov, 2008). Moreover, the electricity grid of Kazakhstan
was built during Soviet times; hence, after getting independence the northernand southern parts of Kazakhstan were not connected by common electricity
grid. Consequently, it appeared that the largest producer of energy is Pavlodar
oblast in north of Kazakhstan, whereas the most consumption is coming fromthe southern part (Vinokurov, 2008).
The development of nuclear energy is projected to cover the development
and enlargement of all stages of nuclear fuel cycle inside the country. Uranium
mining is already developed, however, all the other stages like fuel pellets
production, construction of reactors, waste storage and management of nuclear
power plant is still need to be developed. The nuclear energy developmentin Kazakhstan is so far directed for the purposes of Kazakhstan’s nuclear
industry and international cooperation. The development of nuclear energy
in Kazakhstan will be alternative source of electricity supply. However, theactual use of nuclear power is the long-term strategy, as was laid out in thestate program from 2014 (Government of Kazakhstan, 2010). Considering theevents in Fukushima nuclear power plant, the construction of nuclear plant in
Kazakhstan is quite debatable issue.

Conclusion
The development of nuclear energy in Kazakhstan is an important andstrategic decision. It is evident that nuclear energy development is associatedwith numerous risks and challenges and requires substantial financial
investments. The development of nuclear energy could bring the innovativeand industrial growth to Kazakhstan and support the economy of the country.
However, in the context of energy sector the analysis of Kazakhstan has shownthat the role of nuclear energy in the country seems to be rather minor. The
country would still, in the short-term, rely on hydrocarbons and the percentage
of nuclear power generation would be small. According to the state program,nuclear energy is not projected to be generated throughout the country, butrather in specific areas. Although, nuclear energy could be targeted to generate
additional electricity for southern regions of Kazakhstan, where there isshortage of electricity, still nuclear energy would only supplement other efforts

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made by Kazakhstan’s government to resolve the issue. Thus, the developmentof nuclear energy in Kazakhstan is important for the export of nuclear industry
products rather than for covering the overall domestic energy needs.

Appendix

Source: Lonely Planet, at http://www.lonelyplanet.com/maps/asia/kazakhstan/ (January 24, 2012)

The Development of Nuclear Energy in Kazakhstan and its Integration to the Country’s Energy Sector 119

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