Kazakhstan is richly endowed with energy reserves and was the second-largest oil producer among the former Soviet republics. Oil is its most promising energy source for exploitation. Whereas current oil sources are located along the northeastern shore of the Caspian Sea near Aqtau, the enormous Tengiz oil field lies further north along the coast. Kazakhstan's total proven oil reserves at the beginning of 2002 stood at 5.4 billion barrels.
In May 1992, Chevron entered into a joint venture agreement with Kazakhstan to develop the Tengiz oil field which is estimated to contain 6–9 billion barrels of recoverable crude oil reserves. By April 1993, a 40-year agreement was signed, creating the Tengizchevroil joint venture. In 1996, an agreement was reached to build a major oil pipeline to connect the Tengiz oilfield to a Russian port on the Black Sea. The 1,580-km (990-mi), $2.50-billion Caspian Pipeline Consortium pipeline went into operation in 2001. As of mid-2002 production of oil from Tengiz totaled 250,000 barrels per day. Total oil production in 2001 was 811,000, up from 570,000 barrels per day in 1991.
Some natural gas is also produced as a derivative from oil fields on the shores of the Caspian Sea. Production of natural gas in 2001 totaled 8.9 billion cu m (310 billion cu ft). Hard coal is mined from the Qaranghandy and Ekibastuz basins. Total coal production in 1997 was 80 million tons.
Several hydroelectric projects also operate. The Qapshaghay Dam on the Ile River, north of Almaty, and the Shardara Dam, on the Syrdar'ya in the extreme south, produce electricity for various industries. In 2001, Kazakhstan's total installed electrical capacity was 17,220,000 kW. Production in 2000 amounted to 48,900 million kWh, of which 86.4% was from fossil fuels and 13.6% from hydropower. Consumption of electricity in 2000 was 48.3 billion kWh.