Tag Archives: oil

Romania’s OMV sells Kazakhstan assets

DEC. 29 2020 (The Bulletin) –Romania’s OMV sold its two subsidiaries in Kazakhstan, KomMunai and Tasbulat Oil, to Magnetic Oil, which is inked to the Kazakh elite for an undisclosed because it said that it wanted to concentrate on projects closer to its core base in the Balkans. KomMunai and Tasbulat Oil owned four production licences for onshore fields in Kazakhstan’s western Mangistau region.

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— This story was first published in issue 467 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

The Caspian Sea is shrinking, warn scientists

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ALMATY/DEC. 23 2020 (The Bulletin) — The Caspian Sea, which provides a livelihood for thousands of people and acts as a fulcrum for international transit routes through the Central Asia and South Caucasus region, is shrinking, new scientific research showed (Dec. 23).

The report produced by universities in Germany and the Netherlands said that the Caspian Sea could lose up to a third of its water by 2100, with water level dropping by 18m, marooning previously important ports hundreds of kilometres inland.

The report’s authors said they wanted to use the threat to the Caspian Sea to highlight the dangers of global warming to inland seas and lakes.

“A massive warning signal is the projected catastrophic drop in water levels for the Caspian Sea, the largest lake in the world, which could hit stakeholders unprepared,” the report said.

Previous studies have warned that the Caspian Sea has been shrinking since the 1990s but not this quickly.

Russia, Kazakhstan, Turkmenistan, Iran and Azerbaijan border the Caspian Sea, which lies at the centre of a series of transport corridors that ultimately connect East Asia with Europe.

The Caspian Sea also hosts the region’s oil and gas industry and is a wildlife reserve, supporting seals, and migratory birds. The report showed how vast areas of the northern section of the Caspian Sea could dry up, with Atyrau in Kazakhstan effectively being stranded hundreds of kilometres from the shore.

Central Asia’s reputation for ecological disasters is already secure with the shrinking of the Aral Sea, which is shared by Uzbekistan and Kazakhstan. It shrank in the 1960s and 1970s to half its original size because of Soviet schemes to siphon off its tributaries to irrigate cotton fields.

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— This story was first published in issue 467 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

Oil companies close Ashgabat offices on coronavirus fears

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JULY 29 (The Bulletin) — Petronas, the Malaysian oil and gas company, closed its office in Ashgabat after 10 of its employees tested positive for the coronavirus.

The closure is perhaps the strongest indication yet that despite the insistence of Turkmen president Kurbanguly Berdymukhamedov that Turkmenistan had escaped the pandemic, coronavirus has infiltrated the country.

Turkmen media has also reported that Chinese state-owned China National Petroleum Company has also closed its office Ashgabat. Since a visit by the World Health Organisation (WHO) this month, masks have become commonplace in Turkmenistan and some shopping centres and bazaars have been closed.

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— This story was published in issue 455 of the Central Asia & South Caucasus Bulletin, on July 31 2020.

— Copyright the Central Asia & South Caucasus Bulletin 2020

Azerbaijan’s Socar confirms major Caspian Sea oil field find

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BAKU/March 19 (The Bulletin) — Azerbaijan’s state oil company Socar confirmed that it had found a major oil field in the Caspian Sea.

Announcing the find, Socar chairman Rovnag Abdullayev said that this was the first significant oil discovery in Azerbaijan’s territory since independence from the Soviet Union in 1991.

“Its oil reserves estimated more than 60m tonnes,” he said. “Development of the Karabagh field will significantly contribute to Azerbaijan’s oil incomes.”

Roughly, 60m tonnes of oil equals 440m barrels, although Mr Abdullayev did not say how much of this was recoverable. This is important as recoverable barrels of oil can be a small proportion of the actual reserves. The Azeri-Chirag-Guneshli oil field, the bedrock of Azerbaijan’s economy, by comparison has around 4b barrels of recoverable reserves and the Kashagan field in the Kazakh sector of the Caspian Sea, which Kazakhstan started operating in 2016, has an estimated 9-13b barrels of recoverable oil reserves.

Azerbaijan is still reliant on oil and gas to power its economy. This year it is turning on gas supplies to central Europe pumped from the BP-led Shah Deniz 2 project via a series pipelines known as the South Gas Corridor.

Socar’s partner in the exploration of the Karabagh field is Equinor, the majority state-owned Norwegian energy company that was formerly called Statoil. Equinor owns a 7.27% stake in the ACG project and an 8.71% stake in the Baku-Tbilisi-Ceyhan oil pipeline that pumps gas from the Caspian Sea to Turkey. It has not commented on exploration of the Karabagh field.

The Karabagh field, which lies 120km east of Baku, was first discovered by Soviet geologists in the 1950 but was never developed. In the mid-1990s.

Nick Coleman, senior editor at S&P Global Platts, told The Bulletin that although not the biggest oil find, the Karabagh field will still be useful for Azerbaijan.

“You have all the infrastructure there already so it should be relatively low-cost to develop,” he said. “And it is still a pretty decent size. If you’d found that in the North Sea you’d have done very well.”

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— This story was first published in issue 440 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Kazakhstan cuts oil exports via Russia because of contamination

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FEB. 28 2020 (The Bulletin) — Kazakh officials said that they were cutting oil exports via the Russian Baltic Sea port of Ust-Luga next month because of continued contamination issues with its own oil production. Reuters reported that Kazakhstan had planned to send 800,000 tonnes of oil through Ust-Luga in March but that this has been cut back to 600,000 tonnes. It also said that CNPC Aktobemunaigas, a subsidiary of China’s CNPC, has detected high levels of organic chloride in its oil.

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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Kazmunaigas looking at London IPO later this year

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FEB. 25 2020 (The Bulletin) — The deputy CEO of Kazakhstan’s state-owned oil and gas company, Kazmunaigas, Zhakyp Marabayev, said that it would be looking to list on the London Stock Exchange in October or November. Kazakhstan has talked up the sale of shares in Kazmunaigas for years as part of its “People’s IPO” but has constantly delayed going ahead with it, often saying that market conditions were not right.

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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Kazakhstan rejects $1.1b offer to settle Karachaganak row

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ALMATY/NOV. 26 (The Bulletin) — Kazakhstan told the consortium of energy companies developing the Karachaganak gas field in the north of the country that their $1.1b offer to settle a dispute was insufficient.

The dispute has been festering for more than four years, undermining Kazakhstan’s reputation as a place to do business and frustrating the consortium led by Royal Dutch Shell which is developing Karachaganak, one of Kazakhstan’s most high-profile energy projects.

A resolution to the dispute had been announced in October last year, although it now appears to have fallen through.

Media quoted Kazakhstan’s first deputy energy minister Makhambet Dosmukhambetov saying that the government wasn’t happy with the $1.1b offer. He didn’t elaborate as to why the government had pulled back from accepting the payment but he did hint that more negotiations were needed to find a solution to the row.

“New circumstances have been uncovered,” he said.
None of the partners developing Karachaganak — Shell, Lukoil, Chevron and Kazmunaigas — have commented.

Kazakhstan originally filed a $1.6b claim against the consortium developing the Karachaganak consortium in 2015 because it said that it hadn’t been receiving a fair share of the profits.

Over the past few years, Kazakhstan has been trying to gain bigger stakes in energy projects that have been dominated by foreign companies. It has said that when many of the deals were made to develop gas and oil fields in the chaotic post-Soviet 1990s, the Kazakh government was in an unfairly weak position.

Karachaganak, near Aktobe in the north of Kazakhstan, is one of the country’s most important oil and gas projects. It generates around 50% of Kazakhstan’s gas and 18% of the country’s oil.

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— This story was first published in issue 430 of the weekly Bulletin.

Unplanned repairs hit Kashagan output

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ALMATY/NOV. 26 (The Bulletin) –Unplanned maintenance work at the Kashagan oil field in the Kazakh sector of the Caspian Sea has hit output more sharply than expected, Reuters reported by quoting two sources.

The sources said that production at the end of November was around 184,000 barrels of oil per day (bpd), down from 400,000bpd at the start of the month. Kazakh officials had previously said that production was down to around 270,000bpd.

Kashagan, which is being developed by Eni, ExxonMobil, CNPC, Royal Dutch Shell, Total, Inpex and Kazakh state energy firm Kazmunaigas, has been beset by problems. It opened late and billions of dollars over budget.

There have also been a series of technical problems that have slowed its production. Kashagan is one of Kazakhstan’s biggest oil fields.

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— This story was first published in issue 430 of the weekly Bulletin.

Kazakhstan criticises budget for Tengiz upgrade

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NOV. 6 (The Bulletin) — Kazakh energy minister Kanat Bozumbayev said that the budget for expanding the Tengiz oil field was too high, a declaration that sets Kazakhstan’s government at odds with Tengiz’s Western investors. The Tengiz project, which is led by Chevron, is Kazakhstan’s biggest producing oil field. Reports have appeared which have said that it will cost $45.2b to expand Tengiz, up from an initial cost estimate of $36.8b.

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— This story was first published in issue 428 of the weekly Bulletin.

Chevron completes sale of Azerbaijani assets

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BAKU/NOV. 4 (The Bulletin) — Chevron finalised a deal to sell out of major stakes it owned in Azerbaijan’s oil and gas sector, a reflection of the reduced US corporate interest in the region.

In the deal, Chevron sold its 9.57% stake in the Caspian Sea oil field Azeri-Chirag-Guneshli (ACG), Azerbaijan’s biggest oil producing project, and its 8.9% stake in the Baku-Tbilisi Ceyhan (BTC) oil pipeline for a total of $1.57b to Hungary’s MOL.

The California-based Chevron said in December it wanted to sell its assets in Azerbaijan. ExxonMobil has also said that it wants to sell off its smaller stakes in ACG and BTC.

For MOL, the deal gives it a bigger tie-in with Azerbaijan’s oil and gas sector, less than 12 months before Azerbaijan is due to start pumping gas to central Europe along a network of pipelines stretching from the Caspian Sea via the South Caucasus, Turkey and the Balkans.

“This transaction is an excellent fit to MOL’s current portfolio and the transaction contributes to the further transformation of MOL’s upstream segment into an international business by developing the company’s footprint in its core CIS region,” MOL said in a statement.

The deal is one of the biggest in MOL’s history and will add 20,000 barrels of oil per day to its production ACG has been producing oil since 1997, when the so-called ‘Deal of the century’ was signed between a consortium of Western partners led by BP and the Azerbaijani government.

Over the last eight years or so, its production has been declining, though, frustrating Azerbaijan’s government which has demanded increased investment by the partners.

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— This story was first published in issue 428 of the weekly Bulletin.