International Trade:

Kazakhstan Unlikely to Be Major Source of Oil for the United States

GGD-94-74: Published: Mar 4, 1994. Publicly Released: Mar 4, 1994.

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Pursuant to a congressional request, GAO provided information on: (1) Kazakhstan's potential as a source of oil for the United States; and (2) issues affecting U.S. investment in Kazakhstan's petroleum industry.

GAO found that: (1) Kazakhstan is unlikely to become a major oil source for the United States, since its oil production only accounts for 2 percent of world production; (2) Kazakhstan's oil production can potentially affect oil prices in the future; (3) Kazakhstan's oil reserves range from 3 billion to 16 billion barrels, which is 0.5 to 1.5 percent of the Persian Gulf's proven reserves; (4) Kazakhstan's consumption of crude oil has fluctuated over the past 8 years and its gas consumption, which is nearly double its gas production, has increased steadily since 1985; (5) Kazakhstan's potential status as an oil supplier is hampered by its need to route all of its pipelines through politically unstable areas; (6) other factors affecting Kazakhstan's potential as an oil supplier include its future oil consumption and how much oil it can produce from the unexplored region of the Caspian Sea; (7) Kazakhstan's large gas and oil fields and relatively stable government represent substantial investment and export opportunities for U.S. investors and equipment suppliers; (8) investment and export opportunities in Kazakhstan are hampered by logistics and Kazakhstan's status as a developing country; and (9) the U.S. embassy in Kazakhstan and other U.S. agencies have been helpful in assisting the U.S. oil industry to exploit Kazakhstan's potential, but some industry officials have encountered problems with the agencies, tax policy, export restrictions, administrative difficulties, and European intervention.

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