Kusto founded Kazpetrol Group (KPG) with the goal of becoming a leading oil and gas producer
in Kazakhstan. It pursued a high risk/high reward strategy, acquiring a license from the Kazakh government to explore and extract hydrocarbons in the Kyzylorda region of south-western Kazakhstan. While hydrocarbons had been found nearby, none was ever proven in that particular area.
“We came to an area that literally had nothing on it.
It was a challenge in all senses, and involved high risk. We thought we could make it a success and develop it
if we brought together the right technology and a very focused team,” says Tatishev.
There are no guarantees when it comes to exploring
for oil and gas. Even the big, experienced producers frequently get it wrong. Licenses and fields are often sold and resold as their one-time owners tire of ever finding hydrocarbons and reaping a reward. And even when they are found, the reserves may be smaller
or more difficult to extract than originally expected.
For KPG, the key has been seeking out and implementing engineering and technical excellence.
But for Tatishev and his partners, the motivation was not just financial – there’s also an element of patriotism
to their project.
All highly educated, successful, international entrepreneurs from Kazakhstan, Kusto’s leaders wanted to build something in their country. “We wanted to create something in Kazakhstan. It was a very exciting opportunity,” Tatishev says. “We thought we could find hydrocarbons and we were prepared to use the best technology and work with the best partners
to develop a successful domestic greenfield oil and gas company.”
Success wasn’t instant. It took a further six years of surveys and test wells before production started in earnest. But then a speedy return isn’t always the Kusto way.
We don’t want to damage the land – our land,
“We must do it right. We know we will take a long time to reach peak production. Other producers might spend more and peak earlier. We are more precise,” explains Orazkhan Karsybekov, KPG’s chairman. “We want to be accurate with our drilling. We don’t want to damage the land and deposit – our land, our homeland. We want to build as sustainable a business as possible,” he adds.
KPG doesn’t expect to reach peak production of some 5m barrels of light oil a year until 2020. Experts estimate the life of the field to be between 20 and 25 years. Current annual output is 2m–2.5m barrels, with most sold locally or to the international market.
Tatishev seems unconcerned about falling oil prices, conceding that it’s not ideal but insisting that KPG’s strategy of working with world-class partners who link quality with value and offer the best technology will maximise its efficiency
and protect Kusto’s investment.
downstream outlet that stands out
from any service-station rivals
Part of a broader strategy is its plans for a unique chain of service stations across Kazakhstan, introducing the concept of an integrated retail/filling station environment to the country.
Established in 2014, Compass offers Kusto’s KPG a valuable downstream outlet that stands out from other service-station rivals. Compass is a unique consumer experience, combining retail convenience shopping, high quality fuel supply, and a new standard for ease of purchasing . It’s proving popular and in its first 12 months Compass opened 11 service stations. It plans to have 70 by 2020.
From a empty field in south-west Kazakhstan, Kusto Oil and Gas has become a billion-dollar company within 10 years. It is in a market-leading position by being innovative. It’s a high-risk/high-reward project that epitomises Kusto’s thinking.