Half year passed. What is next?
Despite the recession oil production is growing in
Custom duties as an option?
On August 6, 2009 the Republic of Kazakhstan Agency for fostering competition initiated the rise of customs duties for petroleum, gasoline and diesel oil. In the opinion of Zhandos Nurmaganbetov, the head of the Agency Department of information support, the current rates of customs duties for the export of oil production at $59.87 per tonne, does not meet the interests of exporting companies to sell gasoline and oil in the domestic market. In this concern, the antitrust agency directed a proposal to the government to consider the possibility of increasing the export customs duties. It was also proposed to introduce a temporary ban on the export of oil products.
In its turn, based on the Agency initiatives, the government passed the decree "on amending the
Commenting on the price situation in the domestic market, Mr. Nurmaganbetov highlighted that the rise of prices for gasoline and oil in
Along with this, a representative of the antitrust agency stated that the observed gasoline and diesel oil deficit is mainly factitious: "Overall, the situation in the gasoline and oil market is predictable throughout the republic, except for in the Southern-Kazakhstan and the Zhambyl oblasts, where major players created a factitious deficit". At the same time, he does not exclude the possibility of coordinated anti-competition actions by separate gasoline stations, having leading positions in this market.
In this concern, in cooperation with financial police bodies the Agency for fostering competition is going to run an additional investigation in relation to unfair gasoline and oil market players. In case the investigation reveals facts of unfair competition agreements or coordinated actions the documents will be submitted to the financial police in order to take appropriate criminal procedure measures.
From now on the Agency is going to consider the coupon sales of gasoline "as creation of a fictitious deficit and discrimination" that also violates Kazakhstani antitrust law.
On August 4, 2009 JSC KazMunayGas Trade House (100% subsidiary of NC KazMunayGas) signed "the sale agreement for a 100% stake in the authorized capital stock of the Refinery Company RT LLC, which used to be the owner of assets and 58% of the JSC Pavlodar petrochemical plant".
Since other 42% of shares belong to the Committee for state property and privatization under the RK Finance Ministry, from now on this oil refinery is totally controlled by the state.
This deal was closed by KazMunayGas by the assignment of the government as well as under the implementation of the domestic oil processing plants comprehensive development plan for 2009-2015.
The major goal of the plan is to ensure the energy security of the republic in order to totally satisfy domestic need in major types of oil products (gasoline, aviation fuel and diesel oil). Moreover, the plan assumes the achievement of the dynamic development of oil processing plants’ competitiveness through introduction of new technologies and machines as well as improving production efficiency.
According to the plan, in IV quarter of this year it is planned to develop and run a state examination of a feasibility study, dedicated to the reconstruction and modernization of the
Tengizchevroil concluded the half year period
In the first six months of 2009 the joint venture Tengizchevroil produced and sold 10.2 million tonnes of oil. In the January-June period of 2008 the same indicator was 8.8 million tonnes.
In the first half of the year the company exported 7.5 million tonnes of oil by the CPC pipeline to the terminal in
In the first half of the year the production volume of liquefied gas reached 534 thousand tonnes while its sales volume reached 539 thousand tonnes. Besides, JV Tengizchevroil produced 3.2 billion cubic meters and exported 2.4 billion cubic meters of dry gas.
In this period the company also produced 1.1 million tonnes of sulphur while its sales volume reached 1.37 million tonnes. Today, JV Tengizchevroil sells four types of sulphur to companies in
New record of KazTransOil
In July of 2009 JSC KazTransOil transported a record volume of petroleum – 773 thousand tonnes (the previous record was marked in October of 2008 and reached 629 thousand tonnes) – by the Atasu-Alashankou oil pipeline. Overall, from January-July of this year 4.066 million tonnes were transported by this oil pipeline. Comparing to same period of last year the volume of transportation grew by 743 thousand tonnes.
Moreover, in July JSC KazTransOil reached record indicators of Russian oil transportation in the Kazakhstani territory of TON-2 oil pipeline. The transit volume reached 479 thousand tonnes. Overall, 2.845 million tonnes of oil was transported here in seven months, which exceeds last year figures by 202 thousand tonnes.
The total petroleum transportation volume by the JSC KazTransOil trunk pipeline system reached 28.788 million tonnes in January-July of 2009, which is 1.7 million tonnes higher in comparison with same period in 2008. At the same time, freight turn-over in the system reached 19.116 billion tonne/kilometers, growing by 225 million tonne/kilometers.
JSC KazTransOil (the subject of a natural monopoly) experts note that the increase of petroleum transportation volume is reasoned by the growth of oil production. Moreover, the strengthening of the partnership of JSC KazTransOil with pipeline enterprises in
The volume of oil transportation through Aktau (with the use of JSC KazTransOil capacities) also increased by 1.199 million tonnes. It reached 5.370 million tonnes in the reported period.
The volume of petroleum transportation also increased in the system of trunk pipelines of the Caspian Pipeline Consortium-K Company. It reached 2.592 million tonnes, which is 11 thousand tonnes higher than in the same period of 2008.
The construction of the Kenkiyak-Kumkol oil pipeline is over
On July 1, 2009 the commissioning works for exploitation of the Kenkiyak-Kumkol, the second part of the Western Kazakhstan –
KazStroyService Company completed and submitted the design early, supply of equipment as well as construction and installation works for three projects: oil pipeline (with the length of
The total length of the Kenkiyak-Kumkol oil pipeline is
Note. JSC OGCC KazStroyService prepares the design, material and technical supply and construction of facilities for the oil and gas sector, including oil pipelines, oil refineries and coastal infrastructure. The company runs their business in
NCOC proposes to reduce costs on Kashagan
In the beginning of July of 2009 the North Caspian Operating Company (NCOC) international consortium presented the initiative on lowering costs for the development of the Kashagan field.
In the opinion of NCOC, "the global economic crisis significantly affected the world market that, in its turn, will certainly influence the appropriate liabilities of the project participants". Therefore, necessary efforts are going to be taken under this initiative in order to bring current contracts in compliance with new conditions. The same circumstances will be considered during further negotiations and discussions on future contracts.
NCOC representatives expect that these solutions will allow
Note. Prior to January of 2009 the Kashagan field was developed by Agip KCO international consortium. NCOC became its cessionary, keeping old members: Shell, KazMunayGas, Eni, ExxonMobil, Total (each owns 16.81% of stake), ConocoPhillips (8.4%) and Inpex (7.56%). The functions of NCOC include running control over all types of project works, planning management, coordination, collector modeling, running conceptual researches, preparation of plans for initial development of the field as well as interaction with state bodies on behalf of entire enterprise.
CMOC is getting ready for new drilling
At the public consultations in Aktau on June 23, 2009 the branch of Caspiy Meruerty Operating Company B.V. presented the draft environmental impact assessment for the construction of the Tulpar-1 exploratory well at the Zhemchuzhina part.
Following the discovery of hydrocarbons during the drilling of Khazar-1 and Auezov-2 research and exploratory wells as well as successful drilling of the first Khazar-2 appraisal well, this joint operation company (the operator at the Zhemchuzhina part) is planning a new exploratory well at the Tulpar structure.
The drilling of Tulpar-1 assumes implementation and observing the principle of "zero emission" under constant ecological control of the environment. All the processing and consumption waste will be transported to the coast and utilized at special polygons.
Tulpar-1 will become the third exploratory well, drilling by CMOC at the Zhemchuzhina part with the purpose of searching for oil and gas in the Middle Jurassic deposits.
Note. PSA on Zhemchuzhina was signed in December of 2005. This oil-bearing block of 895 square kilometers is located
The Zhemchuzhina project operator is Caspiy Meruerty Operating Company B.V. that was established on January 8,
With the purpose of wells drilling Shell RD Offshore Ventures Limited signed a contract with LUKOIL Shelf Company for the use of the Astra drilling rig.
Buzachi Operating gas utilization unit is launched
At the end of June of 2009 the petroleum associated gas utilization unit was launched at the
The unit consists of several complex technological units, including a gas-collecting system (made of highly effective glass fiber) as well as a combustion furnace for wet gas and water, injected in the pay bed with the purpose of keeping ground pressure and a higher production rate. The design and construction of the unit were prepared by specialized Kazakhstani companies.
The ratings of KazTransGas and Intergas
In the mid-July of 2009 the Standard & Poor’s international rating agency downgraded the long term credit ratings of JSC KazTransGas (KTG) and its 100% subsidiary, JSC Intergas Central Asia (ICA), the operator of trunk pipelines, from BB to BB-. At the same time, S&P confirmed the long term credit rating of JSC KazTransOil, Kazakh operator of oil pipelines, at BB+ level. The forecast of rating change is "stable". At the same time, the ratings were removed from the CreditWatch list, where they were placed with a negative forecast in June 16, 2009.
According to Sergey Gorin, the credit analyst of S&P, "the downgrade of KTG and
Overall, today, the ratings of KTG and
At the same time, S&P experts highlight that "KTG business risk profile is supported by the stably regulated nature of gas transportation and a favorable tariff regime". The restrictive influence is caused by a strong dependence on OJSC Gasprom (BBB/Negative/A-3), the Russian energy giant, the risk of changing the volume of gas transit after 2011 (when the agreement with Gasprom for gas transit expires), possible competition, imposed by alternative gas exports routes from Central Asia, as well as the nontransparent regime of gas tariff regulation in Kazakhstan and Georgia.
Speaking of the KazTransOil rating, its confirmation reflects the S&P profile of its own creditability of the company at BB+ level. The rating also considers the rating of NC KazMunayGas, the parent company, and includes expected support from its side since KazTransOil has large strategic importance for KazMunayGas and the state in general.
Today, the rating of KazTransOil is at the same level as the long term national currency credit rating of KazMunayGas and it is supported by the characteristics of its own creditability of the company.
Business risk profile is supported by the following: the availability of KazTransOil long term "take or pay" contracts with oil producing companies; weak competition with alternative oil export routes; promising outlook for oil production and oil export growth in Kazakhstan. Low transportation costs and the stable position of the company in the domestic market (thanks to the huge network of oil pipelines) also positively influence its indicators.
At the same time, as per S&P analysts, the restrictive influence on rating is caused by: risks, associated with the construction; dependence of operations of KazTransOil from Transneft (BBB/Negative/-), RF government controlled monopoly operator of Russian oil pipeline system; concentrated clients’ base; high depreciation level of production assets.
The petroleum statistics: a review of the first half of the year
According to the Agency for statistics, in January-June of 2009 the republic produced 30.74 million tonnes of crude oil and 6.18 million tonnes of gas condensate. This is 4.8% higher and, therefore, 4.1% less than in the same period of 2008.
In the reporting period, the production of natural gas reached 17.59 billion cubic meters, which is 4.5% higher than in January-June of the last year. Thus, 9.36 billion cubic meters (-5.4%) of natural gas was produced in gaseous state while its commodity output reached 5.72 billion cubic meters (-3.8%). Moreover, the production of associated gas reached 8.24 billion cubic meters, which is 18.5% higher than in January-June of 2008.
Speaking of oil processing, in the first half of the year the production of gasoline, including aviation fuel, decreased to 1,207.7 thousand tonnes (-10.1%) At the same period, the output of fuel oil fell to 1,491.8 thousand tonnes (-7.4%). The production of kerosene, including jet engine fuel such as kerosene, decreased to 142.7 thousand tonnes (-27%) while the output of gasoil fell to 228.7 thousand tonnes (-10.2%).
In the first five months of 2009 the oil and gas companies, operating in
Along with that, in January-May of 2009
Hydrocarbons output in Kazakhstan in 2004–2008
Oil and gas condensate, million tonnes
Natural gas, billion m3
Source: The Kazakh Statistics Agency