Result of the Year
BackOil Chronicles
November 2017
November 1, the Minister of Energy Kanat Bozumbayev held a meeting on the progress of the Pavlodar Petrochemical Plant (PPCP) modernization, with the participation of the Operating Vice-President of Transportation, Refining, and Marketing of the KazMunayGas Daniyar Tiesov and Director General of PPCP Shukhrat Danbay.
The slippage on completion of modernization and launch of the units necessary for the production of high-octane gasoline and diesel fuel at the refinery was recorded. PPCP modernization deadline was set for October 26, and for the Atyrau refinery it was September 16. However, KazMunayGas rescheduled to the first half of December of the current year.
After hearing the information provided by D. Tiesov and S. Danbay the Minister requested to take urgent measures to ensure the internal market with gasoline and diesel fuel. Following the meeting, the Minister noted the need to commission the unit for production of high-octane gasoline before November 8, and units for production of diesel fuel must be commissioned as soon as possible. In the event of disruption of the established time frame for the completion of the modernization of PPCP, the Minister will initiate the dismissal of top-managers D. Tiesov and S. Danbay from their posts.
Countriesof the Eurasian Economic Union (Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan) prepared a program for the creation of common markets of oil and petroleum products by 2025, providing for the application of uniform rules of stock trading, non-discriminatory access to oil and oil products transportation systems and the unified principles of formation of tariffs for transportation via the main pipelines.
It assumes that the countries of the Union by 2025 will develop mechanisms for the effective use of market pricing tools and development of oil and oil products trading. According to the results of the implementation of the program conditions should be created for non-discriminatory access for the EEU participants to common markets of oil and oil products, customs duties and other taxes and charges for the overall market terminated, quantitative and other restrictions on the supply of petroleum and petroleum products removed.
Tariffs for transportation of oil and oil products will have to be formed under unified principles. Long-term oil transportation should be guaranteed with the technical capabilities of pipeline systems. The Member States of the Union should share statistics on production, transportation, refining, supply and consumption of oil and oil products.
November 7, Shukhrat Danbay, the General Director of Pavlodar Petrochemical Plant LLP, has been dismissed according to the resolution of the Board of Directors of KazMunayGas Refining and Marketing JSC.
“Ospanbek Alseitov was appointed Acting Director General," the Company’s press release reads.
November 8, KazMunayGas has sold Euro-Asia Air company. The deal amounted to 11.8 bln KZT, Sky Logistics Service LLP acted as a buyer. Plans to sell a complete package of shares of Euro-Asia Air was announced in the summer of 2016. According to the evaluation, 100% of the shares market value amounted to 15.6 bln KZT. The company’s air fleet consists of 12 MI-8T helicopters, four Agusta Westland 139 helicopters, two AS-365N3 helicopters, one Challenger 850 and one Challenger 870 aircrafts. Under the sale conditions of Euro-Asia Air, a prospective buyer undertakes within 5 years to save business profile of the object of privatization, not to reduce current full-time staff and not to impair the operating conditions specified in the concluded work contracts between EAA and its employees, including current wage levels.
November 9, presentation of the book The Black Blood of Kazakhstan: Oil History of Independence written by a famous Kazakhstani journalist and analyst of the oil and gas industry Oleg Chervinskiy was held in Astana. The book, which is an oil chronicle of the country, covers numerous participants and events involved. As indicated in the annotations to the book, it is "good enough to be a good documentary with the elements of the adventurous novel in which there are heroes and anti-heroes, big ambitions and an equally big money, geopolitical games and a numerous “bulldog fights under a rug”, roaring success and colossal failures.”
According to the author, he happened to be a witness and participant of many significant events in Kazakhstan's oil industry, he examined and communicated with decision makers, from who the future of the industry and the country as a whole depended. "In the early 2000's I started writing down memories of people, who are called the “oil generals”. These interviews, as well as material from my personal archives, personal experience and observation, publications and memoirs of oilmen formed the basis of this book", said O. Chervinskiy.
As noted by the author, The Black Blood of Kazakhstan, with 2200 copies circulation, is sold in all of Meloman and MARWIN stores in Kazakhstan, as well as in the online store meloman.kz. In addition, it can be purchased at the Astana airport bookstore.
November 9, Kazakhstan and Russia signed an additional protocol to the agreement on the delimitation of the seabed in the northern part of the Caspian Sea. The additional protocol provides for an increase in the contract territory of Kurmangazy Project and giving the operator an additional exploration time for a period of 6 years, with an option to extend it for up to 4 years.
A wholly-owned subsidiary company of NC KazMunayGas JSC Offshore Oil Company KazMunayTeniz JSC (50%) and NC Rosneft JSC (50%) are authorized organization for Kurmangazy Project.
Kurmangazy is the oil, gas and condensate field in Kazakhstan's sector of the North Caspian shelf. The nearest populated locality is the port of Bautino in Mangystau Region, which is 80 km away. The area of Kurmangazy is 1,632 square km. The depth of the water column in the area of the oilfield is between 5 to 7 meters.
The development of the structure will be carried out on a parity basis by the Russian and Kazakhstani State oil companies Rosneft and KazMunayGas. The parties plan to invest 23 bln USD into to the project. Gross profit from its implementation is expected to reach 50 bln dollars.
PSA draft provides 3 options for maximum production level. In the most optimistic case, oil production at Kurmangazy can reach 64.5 mln tons of oil per year. At this level the production can hold up to 7 years.
According to the medium option, up to 31.6 mln tons of oil per year can be produced at the field for 10 years. The third option covers the production of 18.6 mln tons per year for up to 12 years.
November 14, Polish oil refining concern PKN Orlen began oil shipments from Kazakhstan to Poland. Owned by the Bahamas company Frontline Ltd, which is controlled by the renowned Norwegian ship magnate John Fredriksen, the Front Castor tanker left Novorossiysk on this day. It is expected that the tanker will reach the port of Gdansk in early December, where it will be off-loaded at the Naftoport terminal. Oil was transported to Novorossiysk via the CPC pipeline.
Polish oil refining companies PKN Orlen and Lotos are now actively working on the diversification of oil supplies. In January of this year Lotos Group started transporting oil from Iran. And in early November, PKN Orlen and Lotos established a supply of raw materials from the United States.
Kazakhstan is also considered by Polish business as an important oil supplier. In September 2017, President of Poland, Andrzej Duda, visited Kazakhstan, where he discussed with the President Nursultan Nazarbayev the possibility of oil supplies from that country to Gdansk.