Сoronaminus of KazMunayGas
The coronavirus pandemic has dealt a severe blow to the global oil and gas industry. Decreased demand for energy resources due to the worldwide economy's lockdown, reduced mobility of the population, and the air transport sector’s stagnation caused the collapse of world oil prices. The collapse was supplemented by a decrease in oil and gas exports. As a result, the national company KazMunayGas was forced to urgently develop an anti-crisis strategy to cope with the consequences of COVID-19.
The first quarter of 2020 was the most dramatic when the drop in prices and demand were incredibly sharp. At the end of the quarter, KazMunayGas' net profit fell by more than four times. Commenting on this indicator, Dauren Karabayev, Deputy Chairman of the Management Board for Economy and Finance of KMG, predicted that the company's free cash flow would be negative in 2020. "Most likely, we will have to partially use the existing liquidity reserve to support the activities of our enterprises," – he said.
"It is becoming more difficult for KMG to cover current costs, given the current and projected low level of revenue in the future. Continuing to work according to the usual patterns, we risk spending the funds accumulated earlier that could have been spent on development. We risk losing our safety cushion in the event of the next crisis. If the price of oil does not rise to the level of 2019, KMG may not only not recover from the consequences of the crisis, but also lose its stable position in the market," – Karabayev stated.