Results of the Year
Oil Chronicles
SEPTEMBER
September 5, Astana Gas KMG (project company, a subsidiary of the Samruk-Kazyna state holding and Baiterek Fund with 50/50 shares) has announced a tender for selection of contractor for construction of the Saryarka pipeline. "According to the procedures, it takes more than 40 days to sum up the results of the bidding. If in November contract is ready, then, I think, by the end of November we will have to go to the site, mobilize within a month, and in December work should begin, – Energy Minister Kanat Bozumbayev commented. – Calendar year is enough to complete this simple work – to weld and lay a pipe in the steppe. In parallel, local administrations are working on distribution networks," – he added.
The head of the Ministry of Energy specified the financing structure of construction. According to him, the European Bank for Reconstruction and Development (EBRD) will finance the construction of gas distribution networks along the route of the pipe, but does not invest directly in the construction of the gas pipeline. "As for the gas pipeline itself, it is, first of all, the funds of the two shareholders: Samruk-Kazyna and Baiterek, then the loan of the Eurasian Development Bank (EDB), the Development Bank of Kazakhstan (DBK) and the Pension Fund", the Minister concluded.
The preliminary cost of the first stage of the Saryarka gas pipeline is estimated at 267 bln KZT.
Sunkar vessel, built by order of the national company Kazmortransflot, arrived to the port of Kuryk. Sunkar is the latest in a series of three specialized vessels built as part of the Tengizchevroil JV Future Growth Project. The vessels are designed for cargo transportation in shallow water areas of the Northern Caspian sea. The multi-functional modern vessel has a length of 113 m and a width of 21 m, a maximum load capacity of 5200 tons with a draft of up to 4 m, which makes the vessel unique in the Caspian sea.
Sunkar vessel was built in the Romanian city of Braila and accepted by Kazmortransflot on January 16, 2018.
In Kazakhstan a working group to develop a preliminary feasibility study (pre-feasibility study) for the construction of the fourth oil refinery has been established, Deputy Director of the Department of oil industry development of the Ministry of Energy Satzhan Karimov said. According to him, the group included representatives of the Ministry of Energy, Statistics Committee of the Ministry of Economy, Samruk-Kazyna Fund, KazMunayGas, as well as independent experts. "An agreement has been signed with a consulting company to develop a pre-feasibility study, the results of which will determine the location of the plant, its parameters and financing by the end of the year," – Karimov said.
Kazakhstan has invited international investment banks to participate in the initial public offering (IPO) of KazMunayGas oil company in London, five sources familiar with the details of the negotiations told Reuters. According to one source, the placement of shares of KMG – the third in terms of production in Kazakhstan – will take place not earlier than the second half of 2019. Sources refused to talk about the evaluation of the company. KMG accounts for 28% of all crude oil and gas condensate produced in Kazakhstan and 16% of natural and associated gas. In 2015, against the background of low oil prices, KMG barely avoided a debt default, when the national Bank of Kazakhstan sent $4 bln to save it, becoming a shareholder. To date, the main shareholder of the company is the Samruk-Kazyna Fund (90%) and the National Bank (10%).
September 10, the Board of Directors of KazMunaiGas Exploration Production JSC decided to provide the parent company NC KazMunayGas JSC financial assistance in the amount of 680 bln KZT for a period of 12 months, the press-service of KMG EP reported. The current exchange rate is 375.31/$1. According to KMG, the provision of financial assistance from KMG EP is used as one of the tools to improve the efficiency of cash flow (liquidity) management within the Group. "The funds received in the framework of financial assistance will be used for general corporate purposes. It should be noted that the funds are provided on the terms of repayment", - commented on the transaction in KMG
September 13, a major investment project at the Karachaganak field (Project of Karachaganak processing complex gas debottlenecking – KDBN) was launched, an agreement on the implementation of which was signed between the authorized body of Kazakhstan – PSA LLP with the support of the Ministry of Energy of Kazakhstan, and the shareholders of the project (KPO Consortium) represented by Eni, Shell, Chevron, LUKOIL and KazMunayGas.
"Thanks to the KDBN Project, the maximum level of production at the Karachaganak field will be maintained. This project, being one of the largest investment projects with a budget of $1.1 bln, will provide additional revenues to the budget of Kazakhstan in the amount of more than $3.2 bln by 2037," – said in a press-release of the Ministry of Energy. According to the Ministry, within the framework of this project, the minimum share of Kazakhstani content in the procurement of goods, works and services will be 40%, and 75% in the recruitment of personnel. If the costs of the project exceed the approved budget, the excess costs will be borne by the shareholders of the KPO Consortium.
September 18, Prime Minister Bakytzhan Sagintayev held a meeting with representatives of Chevron headed by the President of Chevron. Europe, Eurasia and the Middle East. Exploration & Production,Jeffrey Todd levy, and the new Director of Chevron Eurasian division, J. Baltz. During the meeting, issues of further cooperation in the oil and gas industry were discussed.
In Kazakhstan, Chevron participates in the implementation of major projects, including: Tengizchevroil LLP (50%), Karachaganak Consortium (18%), Caspian Pipeline Consortium (15%).
September 19, the Times of India published an article on the failed project of the Foreign Investment Division of the State Oil and Natural Gas Corporation (ONGC). Journalists refer to the words of the managing Director of ONGC Videsh Ltd (OVL), who said that the company is leaving the Kazakhstani Satpayev project. The publication reports that in April of 2011 OVL bought 25% of the Satpayev oil block, paying Kazakhstan $13 mln as a subscription bonus and an additional $80 mln as a one-time payment for the transfer of NC KazMunayGas. The oil, promised after the preliminary block data assessment, was not found. Having drilled two wells and found no commercial hydrocarbons, OVL decided to withdraw from the contract. In addition, the prolongation period of the first phase of exploration has expired.
The Satpayev exploration block, located in the Kazakhstan sector of the North Caspian sea, covers an area of 1,481 sq. km., with a water depth of 4 to 9 meters. "OVL was once interested in shares in the block, as it is located in close proximity to 4 large explored fields in the Northern Caspian. It was assumed that it has two promising areas, which, according to estimates, hold about 256 mln tons of oil and natural gas resources," – the newspaper writes.
Also, the media of India reported that OVL made a minimum investment in exploration in the amount of $ 165 mln and additional costs in the amount of $235 mln.
The Board of Directors of KazTransOil JSC decided to open a representative office in Moscow. This decision was made for the purpose of optimal and effective performance of KazTransOil JSC contractual obligations in relations with Transneft PJSC and shippers of Kazakhstan, Russia and Uzbekistan in the provision of services for the transportation of Kazakhstani oil for export and transportation of Russian oil through the territory of the Republic of Kazakhstan. The Moscow representative office will start its activities after its accreditation by the authorized state bodies of the Russian Federation. Currently, representative activity of KazTransOil JSC in the Russian Federation is provided by two representative offices located in Samara and Omsk. These units continuously carry out receiving and delivery operations related to the transportation of Kazakhstani and Russian oil under contracts with Kazakhstani, Russian and Uzbek shippers.
Kazakhstan plans to annually produce about 900 thous. tons of jet fuel starting from 2019, Minister of Energy of Kazakhstan Kanat Bozumbayev said. "We plan to fully meet 100% of the demand from next year," – Bozumbayev said, adding that the country's demand is 750 thous. tons. Earlier, he reported that Kazakhstan plans to produce about 450 thous. tons of jet fuel this year, which will cover 70% of the country's demand.
Shymkent oil refinery (PetroKazakhstan Oil Products LLP) has completed the second final stage of modernization of the enterprise, said the President of LLP Jiang Shi. The total investment in modernization amounted to $1,850 bln. The first stage of modernization was completed in the summer of 2017, when isomerization unit was launched. The launch of the operator room means the completion of the entire modernization project. Modernization has enabled the company to establish production of K-4 and K-5 class products, whereas previously the plant produced only K-2.
As the President of LLP specified, the content of sulfur in the products of Shymkent refinery is 10 times less at present. The oil refining ratio has also been increased. "If earlier at the plant from 100% they received 50% of light oil products, now it is 80%. Production has also increased," – the company's President said.
At the same time, after the modernization, the plant managed to increase the production of petroleum products three times: from 5 thous. to 15 thous. tons of fuel per day.
Shymkent refinery was built in 1985. Modernization of the plant started in 2014. KazMunayGas and CNPC each own a 50% stake in ShNOS LLP.
