KAZAKHSTAN 'S GAS UTILIZATION PROGRAM: AN END TO IMPORTS?

Kazakhstan is pursuing a strategy to increase utilization of associated gas in order to reduce its reliance on imported gas from Russia and Uzbekistan. But two key questions arise for the investors that are Kazakhstan 's largest producers of associated gas: How much of this gas utilization strategy will they be asked to finance, and can associated gas be utilized under current conditions without negatively affecting project economics? But gas utilization is imperative if oil production is to continue apace, and Kazakhstan and its producers are struggling with difficult issues as this strategy goes forward:

- Low domestic prices, slow domestic demand growth, and expensive gas processing due to the high sulfur content of the gas make gas utilization a challenge.
- Although constructing new pipelines to carry gas produced in west Kazakhstan to demand centers in the east would strengthen Kazakhstan 's bargaining power in gas negotiations with Russia and Uzbekistan, financing for these projects may be difficult to find.

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