Tag Archives: oil

Business comment: Kazakhstan’s Oil Production

DEC. 20 2015 (The Conway Bulletin) — He must thinks we’re fools.

“We did all we could to keep oil prices high by cutting oil production domestically, now it’s time for other countries to do the same,” Kazakhstan’s minister of energy Vladimir Shkolnik told the press in Astana.

He attributed this year’s 1.5m tonnes production cut in Kazakhstan’s oil output to a deliberate decision to help keep oil out of the market to try to raise prices. If this was the intention, it clearly hasn’t worked, because prices are down to a seven-year low, at around $37/barrel.

But, incidentally, this was not the intention.

As several experts have told the Bulletin throughout the year, Kazakhstan only produces around 2% of the world’s total oil output and does not have a seat at price- setting assemblies such as OPEC.

This makes it a price taker, one that cannot, even by freezing completely oil exports, bring back oil prices above $100/barrel.

A 1.5m tonne cut represents roughly a 2% cut in Kazakhstan’s yearly production and is entirely attributable to aging oil fields and delays in the start of new projects.

The re-start of production at the Kashagan oil field in the Caspian Sea is now looming on the horizon, but at the ministry of energy its production forecast is lower than previously assessed.

Tengizchevroil, the consortium operating Kazakhstan’s largest field, finally said it would go ahead with its expansion project in H1 2016, two years behind schedule and with a $15b cost overrun.

So please, Mr Shkolnik, don’t say you cut production on purpose. The main reason that Kazakh output has dropped is because low oil prices have discouraged production.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Iran hints at increasing stake in the Azerbaijani Shah Deniz

DEC. 15 2015 (The Conway Bulletin) — Iran has said it is interested in increasing its stake in the Shah Deniz offshore gas exploration project in Azerbaijan, a move that would extend Iran’s influence over a project that is becoming increasingly important in Europe’s future energy plans.

Iran’s deputy minister Hossein Zamani Nia said Iran wanted to increase its stake in several international projects. “Several fields and projects in some countries are being examined,” Mr Zamani Nia told the IRNA news agency.

“Shah Deniz is one of those fields but a final decision has not yet been made.”

Through the subsidiary Naftiran Intertrade, state-owned National Iranian Oil Company (NIOC) owns a 10% stake in Shah Deniz, off the coast of Azerbaijan in the Caspian Sea.

BP is the project leader at Shah Deniz with a 28.8% share in the consortium. Turkey’s TPAO owns 19%, Azerbaijan’s SOCAR owns 16.7%, Malaysia’s Petronas controls 15.5% and Lukoil owns the remaining 10%.

The consortium is working on a second development phase of the project, which will more than double the field’s output.

The additional volumes will fill new westward pipelines, such as TANAP, which will pump gas to Turkey and Europe.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

China buys controlling stake in major Kazmunaigas subsidiary

DEC. 15 2015 (The Conway Bulletin) — China’s CEFC energy company will buy a controlling stake in KMG Inter- national, a subsidiary of Kazmunaigas, in a deal that helps Kazakhstan raise cash but also rids Western investors of one of the more interesting companies previously offered up by Kazakh officials as a potential IPO target.

The deal, which will give CEFC a 51% share in the Netherlands-based company, is valued at between $500m and $1b, sources told Reuters.

KMG International, formerly called Rompetrol, owns the Petromidia Navodari refinery and hundreds of petrol stations in Romania, Georgia, Bulgaria and Moldova.

It is affiliated with Switzerland- based KMG Trading, which secured a $3b deal in December with Vitol as the buyer of future oil shipments from Kazmunaigas’ 20% share of the Tengizchevroil consortium.

Neither KMG International nor KMG Trading could be reached for comment.

Kazmunaigas has unsuccessfully tried to sell off Rompetrol-owned assets over the past few years.

Samruk-Kazyna, Kazakhstan’s sovereign wealth fund which owns Kazmunaigas, had said it wanted to sell KMG International in a round of privatisation set for 2016. Now, the privatisation of KMG International seems to have fallen out of this IPO bucket list.

Kazakhstan has said it wants to sell off state-owned companies involved in midstream and downstream operations in an effort to raise much-needed cash to restore financial stability during what has become a sustained downturn in oil prices.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Azerbaijan extinguishes Caspian Sea fire

DEC. 17 2015 (The Conway Bulletin) – The authorities in Azerbaijan said they had finally extinguished the fire at Platform No. 10 of the Guneshli shallow water oil rig off the coast of Baku, nearly two weeks after a storm smashed into it causing an explosion in a gas pipe.

Emergency crews also said they had received permission to search for the bodies of 26 missing oil workers from other littoral states bordering the Caspian Sea.

Three workers from the Oil Rocks platform and 23 workers from the Guneshli platform are still listed as missing.

Rescue teams have already found the bodies of seven workers killed in the fire on Dec. 4.

A final death toll of 33 would make it the worst offshore oil platform accident since the Piper Alpha disaster in 1988 when 167 people were killed.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Deutag wins contracts in Azerbaijan

DEC. 17 2015 (The Conway Bulletin) — British services company KCA Deutag won two contracts with BP worth up to $1b for operations, maintenance and engineering work in Azerbaijan. The Aberdeen-based company will work on seven oil and gas platforms operated by BP off the coast of Azerbaijan, including those exploiting the Azeri-Chirag-Guneshli oil field and the Shah Deniz gas field, two of Azerbaijan’s most important energy projects. KCA Deutag has worked in Azerbaijan for 20 years, mostly with BP. Rune Lorentzen, president of Offshore at KCA Deutag, said: “These major contract awards build on KCA Deutag’s long standing relationship with BP, and recognise our efforts to deliver both continuous improvement and value to our client.”

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

ADB funds Azerbaijani infrastructure

DEC. 14 2015 (The Conway Bulletin) – The Asian Development Bank (ADB) said it would allocate a loan of up to $2.24b to co-finance transport and energy projects in Azerbaijan in 2016- 2017. Out of this loan, the ADB said it would allocate $500m to developing the electricity network and $40m for renewable energy.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Oil field in Kazakhstan to expand in 2016

DEC. 14 2015 (The Conway Bulletin) — Tengizchevroil (TCO), the Chevron- led consortium operating the Tengiz oilfield in western Kazakhstan, said it increased output in the first nine months of 2015 and that it intends to push ahead with its expansion project in the first half of next year. In January-September 2015, Tengizchevroil produced 20.3m tonnes of crude oil, up 2.5% compared to the same period last year when it produced 19.8m tonnes. The so-called Future Growth Project expansion project will cost around $38b to complete and will increase output by 44%. Earlier this year, TCO delayed its expansion plans because of the low price of oil.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Iran wishes expansion in Azerbaijan’s Shah Deniz

DEC. 15 2015 (The Conway Bulletin) – The Iran ministry of energy said it may expand its activities in several international oil and gas fields, including Shah Deniz, Azerbaijan’s biggest gas project.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Azerbaijan’s SOCAR output falls

DEC. 15 2015 (The Conway Bulletin) – A source at Azerbaijan’s statistic committee told Reuters that SOCAR’s low output for the first 11 months of 2015 had pushed down total oil and gas production in Azerbaijan. Azeri-Chirag- Guneshli, a BP-operated offshore oilfield, also contributed to a contraction in production of 0.5%.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Kazakhstan sells off Batumi terminal

DEC. 8 2015 (The Conway Bulletin) — The oil terminal at the port of Batumi, on Georgia’s Black Sea coast, will be among the companies that Kazakhstan sells off to investors during a privatisation round in 2016 and 2017. In 2008, KazTransOil, a subsidiary of state-owned Kazmunaigas, bought the Batumi oil terminal. Kazakhstan needs to sell off state-owned assets to raise cash.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)