JAN. 29 (The Conway Bulletin) — Kazakhstan-focused oil producer Nostrum Oil & Gas said that it expected lower revenues in 2018 because of a 4% decline in production. The announcement by the AIM-listed producer follows 2018 results that already showed a sharp fall in production to 31,254 barrels of oil equivalent, down from 39,199 barrels in 2017.
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>This story was first published in issue 398 of The Conway Bulletin on Jan. 31 2019
Copyright The Conway Bulletin 2019
JAN. 25 (The Conway Bulletin) — As part of improved bilateral relations, Turkmenistan will start pumping its oil via Russia, reducing flows through the BTC pipeline that runs from Azerbaijan, through Georgia to Turkey, analysts told Reuters. The reduction in Turkmen flows will also lower the quality of the oil from BTC as its oil is considered high-quality.
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>This story was first published in issue 398 of The Conway Bulletin on Jan. 31 2019
Copyright The Conway Bulletin 2019
JAN. 3 (The Conway Bulletin) — Oil shipments from the Georgian Black Sea port of Batumi fell by 51.2% in 2018, Reuters reported by quoting an unnamed official at the terminal which is operated by Kazakh oil and gas company Kazmunaigas. Azerbaijan’s decision to push oil shipments through the Baku-Tbilisi-Ceyhan pipeline which it part-owns and a volume increase for the Caspian Pipeline Consortium from Kazakhstan to the Russian Black Sea port of Novorossiysk, are the main drivers of the drop-off at Batumi.
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>>This story was first published in issue 396 of The Conway Bulletin on Jan. 11 2019
DEC. 26 (The Conway Bulletin) — Platts the energy-specialist news service said it expected oil output at Azerbaijan’s Azeri-Chirag-Guneshli (ACG) Caspian Sea field to continue to decline in 2019. ACG is critical to Azerbaijan’s oil production but has been on the decline for the past eight years or so despite BP, its operator, spending millions of dollars patching up its ageing infrastructure. Platts said it expected ACG to produce 510,000 barrels of oil per day in 2019, down from 530,000bpd in 2018.
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>>This story was first published in issue 396 of The Conway Bulletin on Jan. 11 2019
ALMATY/OCT. 1 (The Conway Bulletin) — The partners developing the Karachagank oil and gas site, a cornerstone of Kazakhstan’s energy production, agreed to pay the Kazakh government $1.1b, settling a long-running dispute over profit sharing.
Kazakhstan will also receive an estimated $415m in extra revenue by 2037, based on the price of oil at $80/barrel, in the new profit sharing deal.
For the Karachaganak partners — Shell, ENI, Lukoil, Chevron and Kazmunaigas — and their shareholders, the deal marks the end of a dispute that could have severely undermined the project from 2015 when Kazakh officials first accused the consortium of an unfair profit sharing deal. None of the partners have yet commented on the deal.
The final $1.1b agreed fee is less than the initial $1.6b that Kazakhstan had pushed, although the additional earnings will probably take it close to that amount.
There is also a $1b long-term loan that the consortium has agreed to give to Kazakhstan to develop its regions.
The partners have also committed to spending $5b on upgrading the site to ensure that production continues.
Karachaganak is one of the most important oil and gas projects in Kazakhstan producing nearly 50% of its gas and 18% of its oil production.
This year, Kazakhstan has increased oil production by 5.3% to 60m tonnes by the end of August, the Kazakh energy ministry said earlier this month.
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>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018
SEPT. 26 (The Conway Bulletin) – The Caspian Sea Pipeline Consortium which runs a pipeline that pumps oil from northern Kazakhstan around the Caspian Sea to the Russian Black Sea port of Novorossiysk said that it was likely that volumes would rise to 65m tonnes next year from this year’s expected volume of 60-61m tonnes. Oil prices have risen to their highest level since November 2014, increasing transport volumes.
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>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018
SEPT. 22 (The Bulletin) — Kazakhstan’s Kashagan oil field will produce 270,000 barrels of oil per day during the last quarter of the year, Kazmunaigas told Reuters, less than a previous figure of 300,000 – 370,000 barrels suggested by energy minister Kanat Bozumbayev. Kashagan is the major Caspian Sea oil field that Kazakhstan hopes will propel it into the Premier League of global oil producers.
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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.
— Copyright the Central Asia & South Caucasus Bulletin 2017
SEPT. 18 (The Bulletin) — Switzerland-based oil trader Vitol has extended its so-called cash-for-crude loans to Kazakhstan to $5b, the FT reported. This is an extension of the original $3b deal thrashed out between Kazakh state oil and gas company Kazmunaigas and Vitol in April last year. The deals have come about as Kazakhstan needs to generate cash on forward oil contracts. They have positioned Vitol at the centre of the Kazakh oil system, shipping barrels to Russia and on to Europe.
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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.
— Copyright the Central Asia & South Caucasus Bulletin 2017
SEPT. 14 2017 (The Conway Bulletin) — A consortium lead by BP signed a deal to extend its operation of the Azeri-Chirag-Guneshli (ACG) fields in the Azerbaijani section of the Caspian Sea, an agreement originally dubbed the “Contract of the Century” in 1994.
Under the new deal, BP and its partners will run ACG, Azerbaijan’s biggest producing oil fields, until 2050. The original contract was due to expire in 2024.
Negotiations for a renewed deal had been ongoing all year and despite each side’s frustrations with the other, an agreement had always been likely.
At the signing ceremony in Baku, Bob Dudley, the BP CEO, said: “Over the past 23 years the ‘Contract of the Century’ has truly transformed Azerbaijan, energy supplies to Europe and all of us who have worked so hard to make it a success. Today’s contract is perhaps an even more important milestone in the history of Azerbaijan.”
SOCAR chairman Rovnag Abdullayev was equally exuberant.
“Today is a significant day for Azerbaijan,” he said. “Since the signing of the first PSA in 1994, ACG has benefited from $33bn of investment, producing around 440 million tonnes of oil, and delivering directly more than $125bn of net profit to our country.”
For Azerbaijan, this second operating agreement for ACG is much improved from the original. SOCAR, the Azerbaijan state oil and gas company, increased its stake in the project to 25% from 11.65%. The Azerbaijani government, strapped for cash in the midst of an economic downturn, will also receive a one-off $3.6b payment.
For BP, securing an extension to the agreement was vital. ACG forms a major part of its reserves and income. Its share in the project has been cut to 30.37% from 35.8%. Its partners, other than SOCAR, have also had to agree to an equity cut to secure a new deal on ACG.
Chevron now owns a 9.57% sake, Inpex 9.31%, Statoil 7.2%, ExxonMobil 6.79%, TPAO 5.73%, Itochu has 3.65% and ONGC Videsh holds 2.31%.
Relations between Azerbaijan and the BP-led coalition have become increasingly fraught over the past few years.
Azerbaijan has been frustrated that BP hasn’t been able to stem a drop in production at the site and BP executives have become increasingly exasperated at the negative headlines surrounding Azerbaijan, which has been accused by the West of clamping down on the media and of various corrupt practices.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
ALMATY/SEPT. 15 2017 (The Conway Bulletin) — — Kazakh officials want an improved offer from Shell and ENI to end a long-running dispute over a $1.6b profit sharing claim at the oil and gas Karachaganak project in the north of the country.
They told the Reuters news agency that the Shell-led consortium operating the plant, Kazakhstan’s biggest gas producer, had offered to build a gas processing plant in exchange for dropping the profit sharing claim.
Kazakh Energy Minister Kanat Bozumbayev declined to confirm this but did say that the offer fell short of his expectations.
“We have calculated the value of the offer to Kazakhstan and it does not meet our demands and we have already told that to consortium members,” he said told Reuters.
“We have asked the consortium to offer something in addition.”
Kazakhstan has said that it is owed an additional $1.6b from a profit sharing scheme. The tax authorities have also investigated Karachaganak and some Western commentators have said that they are simply looking to squeeze extra cash out of their partners.
The consortium operating Karachaganak has not commented.
Shell and Italy’s Eni are the field’s operators and largest shareholders with a 29.25% stake each. Chevron (18%), Lukoil (13.5%) and state-owned Kazmunaigas (10%) own the rest.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017