Tag Archives: oil

Kazakhstan increases arbitration claim against international oil companies

ALMATY/APRIL 17 2024 (The Bulletin) — Kazakhstan has increased an arbitration claim initially lodged last year against international energy companies to more than $150b, sources told Reuters.

The claims, focused on the Kashagan and Karachaganak oil and gas fields, are based on alleged lost income by Kazakhstan. The increase from $16.5b makes the arbitration claim one of the world’s biggest.

Reuters quoted a “source with knowledge” of the case as saying that the new litigation claim “reflected the calculation of the value of oil production that was promised to the government but not delivered by the field developers”.

Kazakh officials and Western oil companies have not commented on the new figure, although they confirmed that they are involved with unspecified attribution proceedings.

Kashagan and Karachaganak are two of Kazakhstan’s biggest oil and gas fields. Both have been the focus of legal disputes with the Kazakh government previously. Kazakh officials have said they were unfairly dealt with in the 1990s when oil companies were making deals to exploit fields in newly independent former Soviet states.

In 2020, the Karachaganak partners paid out $1.9b to settle an arbitration dispute with Kazakhstan. Kazmunaigas, the Kazakh state oil and gas company, is now a shareholder in both projects.

Analysts have said that arbitration claims are part of the risk of doing business in Kazakhstan and that international companies factor this risk into their costs.

The specifics of the current dispute have not been disclosed, although Kazakh officials have said that it is a purely commercial dispute that will be settled through the courts.

“The sides are going to resolve it within the arbitration framework,” the Kazakh energy ministry said.

Italy’s Eni is the main developer at Kashagan and also at Karachaganak, alongside Shell.

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— This story was published in issue 565 of the Central Asia & South Caucasus Bulletin, on April 23 2024

— Copyright the Central Asia & South Caucasus Bulletin 2024

BP opens new oil platform in Azerbaijani sector of Caspian Sea

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BAKU/APRIL 16 2024 (The Bulletin) — BP started oil production at a new platform at its main oil field in the Azerbaijani sector of the Caspian Sea, its first in 16 years.

The Azeri Central East platform (ACE) is the seventh in the Azer-Chirag-Gunashli field (ACG) which has been the mainstay of Azerbaijan’s oil production since 1997.

“ACE is increasing Azerbaijan’s oil production and helping to make the most of a maturing field. It’s giving both BP and Azerbaijan the opportunity to get more value from existing fields and assets,” said Ruhali Imanov, the commissioning superintendent on the platform.

Ilham Aliyev, Azerbaijan’s president, has pressured BP for years to reverse declining production rates at ACG.

Its output is expected to increase by 24,000 barrels per day this year to around 430,000 barrels per day as two more wells come on stream. Peak production at ACG was around 1m barrels per day in 2010.

BP said that the new ACE platform would produce 100,000 barrels of oil per day at its peak.

“One of its exciting features is the location of the control room onshore rather than on the platform, a first for both the region and for BP,” said BP.

In 2019, the ACG shareholders pledged to boost production with a $6b development plan.

The first oil from ACG was produced in 1997.

BP is the biggest shareholder in ACG with a stake of 30.4%, followed by Azerbaijani state oil company Socar with a 25% stake.

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— This story was published in issue 565 of the Central Asia & South Caucasus Bulletin, on April 23 2024

— Copyright the Central Asia & South Caucasus Bulletin 2024

CPC pipeline reopens after shut down

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APRIL 11 2024 (The Bulletin) — The 1,511km CPC oil pipeline resumed exports after a scheduled two-day shutdown at its export harbour at the Russian port of Novorossiysk in the Black Sea. CPC is vital for Western oil supplies and is exempt from international sanctions even though it travels across Russia from West Kazakhstan. CPC plans to export 70m tonnes of oil this year, up from 63m tonnes last year.

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— This story was published in issue 564 of the Central Asia & South Caucasus Bulletin, on April 15 2024

— Copyright the Central Asia & South Caucasus Bulletin 2024

Kazakhstan agrees deal with OPEC to increase oil production

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JULY 19 2021 (The Bulletin) — Kazakhstan said that it had agreed a deal with OPEC to allow it to increase its oil production quota from August. Although not part of OPEC, Kazakhstan, with Russia and Azerbaijan, had agreed to go along with oil output cuts that OPEC set early in 2020 to try to push up depressed oil prices. From August, Kazakhstan will produce 1.491m barrels of oil per day, up by 16,000 barrels. This is still below its benchmark November 2018 levels.

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— This story was published in issue 493 of the Central Asia & South Caucasus Bulletin, on July 22 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Lukoil expects to be named Dostluk operator

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JUNE 3 2021 (The Bulletin) — Lukoil expects to be named as the operator of the Caspian Sea’s Dostluk oil field which Turkmenistan and Azerbaijan said earlier this year that they want to exploit, the TASS news agency quoted Lukoil chairman Vagit Alekperov as saying. Dostluk sits midway between Azerbaijan and Turkmenistan and had been the focus of a long-running row between the two countries.

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— This story was published in issue 487 of the Central Asia & South Caucasus Bulletin, on June 9 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

BP walks away from three oil projects in Kazakhstan’s Caspian Sea

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ALMATY/MARCH 11 (The Bulletin) — Britain’s BP has walked away from three oil and gas projects in the Kazakh sector of the Caspian Sea, saying that it wanted to focus on developing its renewable energy portfolio instead, Kazakhstan’s state-owned Kazmunaigas said (March 11).

BP’s decision to ditch potential projects in the Caspian Sea with Kazmunaigas, which it explained in a letter in October last year, will concern Kazakh officials who still see exploiting oil and gas potential as the quickest and most certain way of pushing economic development forward.

Kazmunaigas said that it was publishing BP’s letter on its website in response to media speculation on why progress on the three hydrocarbon blocks has stalled.

“The decision is related to a revision of the company’s strategy — BP intends to focus its activities on renewable energy sources,” Kazmunaigas wrote.

For the 18 months up to October 2020, BP had been evaluating the potential for developing the Bolshoy Zhambyl, Zhemchuzhnaya and Kalamkas Sea offshore blocks, located near the Karachaganak oil field. Karachaganak is Kazakhstan’s largest post-Soviet oil discovery but it has been beset by cost overruns and production problems.

BP’s exit from the Kazakh sector of the Caspian Sea follows a decision by Royal Dutch Shell in 2019 to also quit two oil projects because the costs were too high.

During the coronavirus pandemic, oil prices plunged and last year BP said that it wanted to restructure its portfolio and cuts its hydrocarbon base by 40% over the next decade.

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— This story was published in issue 475 of the Central Asia & South Caucasus Bulletin, on March 15 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Azerbaijan’s daily oil production will increase -EIA

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MARCH 11 (The Bulletin) — The US Energy Information Agency (EIA) increased its forecast for Azerbaijan’s oil production to 770,000 barrels per day (bpd) in 2021, up 40,000bpd from an earlier forecast. The increase is linked to a relaxation of oil production limits that the Saudi-led oil cartel OPEC and its FSU supporters, Russia, Kazakhstan and Azerbaijan, introduced last month. Limits had been imposed to push up oil prices. In 2020, during the oil production limits, Azerbaijan had produced 710,000bpd. Oil revenues form the backbone of Azerbaijan’s economy.

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— This story was published in issue 475 of the Central Asia & South Caucasus Bulletin, on March 15 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

OPEC agrees to allow Kazakhstan to increase its oil production quota

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MARCH 5 2021 (The Bulletin) — OPEC, the Saudi Arabia-dominated oil exporting group agreed to allow Kazakhstan to raise its output. OPEC members had cut production to boost oil prices. Now that prices have increased, Brent crude is at around $69/barrel — its highest since the end of 2019, OPEC has loosened restrictions. Azerbaijan and Kazakhstan, along with Russia, are not OPEC members but had gone along with the cuts. From April, Kazakhstan can boost its output by 20,000 barrels of oil per day (bpd), up from its current level of 1,437,000bpd. Azerbaijan, though, has agreed to maintain its output at 595,000 bpd.

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— This story was published in issue 474 of the Central Asia & South Caucasus Bulletin, on March 5 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Turkmenistan and Azerbaijan agree deal to develop Caspian Sea oil block

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BAKU/JAN. 21 2021 (The Bulletin) — Turkmenistan and Azerbaijan agreed to jointly develop an oil block in the middle of the Caspian Sea, ending a 30-year feud that has slowed energy development in the region.

Analysts said that the deal to develop the Dostyk block was the most significant for the Caspian Sea energy industry since plans to exploit the giant Kashagan field in the Kazakh sector were put into action in the 1990s.

After watching, on a video screen, the Azerbaijani and Turkmen foreign ministers sign the deal in Ashgabat, Turkmen Pres. Kurbanguly Berdymukhamedov described the agreement as “historic”.

“This is a truly significant event in the life of our countries and peoples,” he said. “It is aimed at strengthening our friendship and cooperation.”

Since the collapse of the Soviet Union in 1991, Turkmenistan and Azerbaijan have argued about the ownership of the Dostyk block which lies, roughly, in the middle of the Caspian Sea. The Dostyk block neighbours the Chirag and Azeri fields which Azerbaijan has exploited, with the help of BP, and used to anchor a major oil export business.

As well as developing the Turkmen and Azerbaijani oil industries, analysts said that the development of the Dostyk field should also accelerate plans for a trans-Caspian Sea pipeline that would connect to pipelines running to Turkey and Europe.

This is a potential game-changer for Turkmenistan, which holds the world’s fourth -argest gas reserves but is largely reliant on Russia and China for sales.

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— This story was first published in issue 469 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

Power outages dent Kazakh oil exports

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JAN. 18 2021 (The Bulletin) — Power outages in Kazakhstan have caused Kazakh oil exports to fall by around 130,000 barrels per day, Reuters reported by quoting a source. The source said that power outage problems were impacting production at the country’s two main fields, Tengiz and Kashagan, in the west of the country. From Jan. 17, the source said, Kazakhstan had been pumping 1.62m barrels of oil per day, down from its target of 1.75m.

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— This story was first published in issue 469 of the Central Asia & South Caucasus Bulletin