Tag Archives: hydrocarbons

Gazprom drills gas well in Tajikistan

JULY 12 2016 (The Conway Bulletin) — Russian gas company Gazprom said it drilled a second well at its Sarikamysh gas and condensate field in western Tajikistan, eight years after winning the licence. In 2013, Gazprom drilled at Sarikamysh the deepest well in Central Asia at 6,540m. Murod Jumazoda, head of the government’s Geology Department, said the project is still some way off producing gas.

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(News report from Issue No. 289, published on July 15 2016)

Gazprom seeks compensation from Turkmenistan

JULY 6 2016 (The Conway Bulletin) — Russia’s state-owned gas company Gazprom will seek $5b in compensation at the international arbitration court in Stockholm from Turkmenistan for what it has said was the illegal and unilateral termination of a gas supply contract, sources told the Kommersant newspaper. Turkmenistan and Gazprom rowed in 2014 and 2015 over prices for Turkmen gas imports to Russia.

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(News report from Issue No. 288, published on July 8 2016)

Exports drop at Azerbaijan’s SOCAR

JULY 1 2016 (The Conway Bulletin) — In its monthly report, SOCAR said it cut its oil export by 10% in the first half of 2016, compared to last year. The company did not give a reason for the drop. Shipments via Turkey’s Ceyhan port, the terminal of the Baku-Tbilisi-Ceyhan pipeline, were 30% lower in June 2016 compared to last year. Shipments via the Supsa terminal in Georgia fell by 48% in the same month.

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(News report from Issue No. 288, published on July 8 2016)

Business comment: Contracts of the century

JULY 8 2016 (The Conway Bulletin) — After the fall of the Soviet Union, multinational oil companies flocked into Central Asia and the South Caucasus to strike new deals around the Caspian Sea.

Kazakhstan in 1993 and Azerbaijan in 1994 awarded two massive licenses to Chevron and BP respectively. Both contracts became known as “the contract of the century”.

They became the largest oil projects in Azerbaijan and Kazakhstan, both operated under Production Sharing Agreement schemes, which gave significant advantages to the multinational companies in recovering their initial capital expenditures.

In the new era of sustained low oil prices, however, the Azeri-Chirag-Guneshli (ACG) group of offshore oil fields in Azerbaijan has had a different fate from Tengizchevroil in west Kazakhstan.

Azerbaijan’s President Ilham Aliyev has repeatedly pushed BP and its partners to increase production and continue to invest in spite of lower returns. Since mid-2014, when oil prices started plunging, ACG’s output growth has been sluggish at best. Now a potential corporate war over ACG between BP and Exxon contrasts strikingly to the success story of Tengizchevroil.

After years of mulling over an expansion and balancing costs, the consortium decided to launch a $36.8b investment that will boost production by 2022. This is a relief for Kazakhstan.

Tengiz has one of the lowest production costs in the region, at around $5.3/barrel, which makes it an easy bet even when oil prices are so low.

After the hype of the 1990s, now it seems clearer which of the two really deserved to be called the “contract of the century”.

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(News report from Issue No. 288, published on July 8 2016)

TCO approves $36.8b project for Tengiz oil field in Kazakhstan

JULY 5 2016 (The Conway Bulletin) — Tengizchevroil (TCO), a Chevron- led consortium, approved a $36.8b expansion project for the Tengiz oil field in west Kazakhstan. The consortium said the expansion will boost production by 45% to around 39m tonnes/year by 2022. Tengiz is Kazakhstan’s most profitable oil field.

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(News report from Issue No. 288, published on July 8 2016)

Kazakhstan’s Tengizchevroil approves $37 billion expansion plan

ALMATY, JULY 5 2016 (The Conway Bulletin) — After prevaricating for three years, Tengizchevroil (TCO), a Chevron-led consortium, approved the $36.8b expansion of the Tengiz oil field in west Kazakhstan.

Low oil prices had thrown the Tengiz expansion plans into doubt, so the decision will be a huge relief to the Kazakh government which has been looking for ways to stimulate output to beat slowing GDP growth.

The so-called Future Growth Project will boost production at TCO by 45% to 39m tonnes/year by 2022.

Government officials and company representatives lauded the deal, the largest private investment in the world’s oil industry for a decade.

“This decision made by major international companies re-affirms that the Republic of Kazakhstan is a country with favourable business climate where long-term investments can be made with confidence,” the Kazakh minister of energy Kanat Bozumbayev said in a press release.

Through its state-owned energy company Kazmunaigas, Kazakhstan owns 20% of TCO. The other shareholders are Chevron (50%), Exxon (25%) and Lukoil’s subsidiary LukArco (5%).

The development of the Tengiz oil field near Atyrau has been one of the West’s success stories in the former Soviet Union. It is Kazakhstan’s largest oil producer, pumping out a third of its total output, and exports via the CPC pipeline that sweeps through Russia, north of the Caspian Sea to Novorossiysk on the Black Sea.

This compares to the Kashagan oil project in the Caspian Sea which is years behind schedule and billions of dollars over budget.

Analysts said that TCO had decided that oil prices were steadily moving back up and that low steel prices and cheap labour made the timing right for expansion.

The consortium said the expansion will generate as many as 20,000 jobs during the peak construction phase.

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(News report from Issue No. 288, published on July 8 2016)

Kazakhstan is ready to supply gas to China, president says

JULY 4 2016 (The Conway Bulletin) – President Nursultan Nazarbayev said Kazakhstan is ready to supply gas to China, a move that would further improve the two countries’ energy ties. Mr Nazarbayev met with Wang Yilin, chairman of China’s state-owned energy company CNPC, in Astana. Mr Nazarbayev hailed CNPC’s role in boosting Kazakhstan’s energy sector with its multi-billion dollar investments over the past two decades. Kazakhstan currently hosts a gas pipeline that pumps Turkmen gas to China.

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(News report from Issue No. 288, published on July 8 2016)

BP-Exxon row slows development at Azerbaijani field

JULY 1 2016 (The Conway Bulletin) — A row between BP and Exxon Mobil risks delaying an agreement between members of a consortium developing Azerbaijan’s largest oil field, Azeri-Chirag-Guneshli (ACG), sources told Reuters news agency.

Any delay in developing the field will be a major embarrassment for BP, the lead operator of the project, and a disappointment to Azerbaijan which is looking to boost oil production.

“BP and Azerbaijan agree to the new terms but Exxon keeps rejecting them time and time again,” Reuters reported quoting an anonymous source with knowledge of the sector and the companies.

“It has been going on for almost two years, with Exxon insisting on better terms.”

In May, the Azerbaijani government said it had submitted its proposal for a new contract to all consortium members. No details of the contract, or its sticking points, have been released.

ACG was dubbed the “contract of the century” when it was first signed in September 1994.

The consortium shareholders are BP (35.8%), Exxon (8%), SOCAR (11.6%), Chevron (11.3%), Japan’s INPEX (11%), Statoil (8.6%), Turkey’s TPAO (6.8%), Japan’s ITOCHU (4.3%) and India’s ONGC (2.7%).

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(News report from Issue No. 288, published on July 8 2016)

Kazakhstan’s trade turnover sinks

JULY 5 2016 (The Conway Bulletin) — Hit by a sharp drop in commodity prices, Kazakhstan’s foreign trade turnover shrank by 30% in Jan.-April compared to the same period last year, the Statistics Committee said. Exports fell by 31% in the first four months of the year to $11b while imports fell by 29% to $7.2b. The global drop in oil and commodity prices has exposed Kazakhstan’s over reliance on its extractive industry.

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(News report from Issue No. 288, published on July 8 2016)

Putin ratifies oil supply deal with Tajikistan

JULY 3 2016 (The Conway Bulletin) — Russian President Vladimir Putin ratified an oil supply agreement with Tajikistan signed in 2013. The deal will allow Tajikistan to import oil under a duty-free scheme. Tajikistan, however, cannot re-export the oil supplied by Russia. Russia is one of the main suppliers of oil for Tajikistan. The deal increases Russia’s influence over Tajikistan.

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(News report from Issue No. 288, published on July 8 2016)