Oil Chronicles
Oil Chronicles. March 2024
March

South Korea, Asia's third-largest crude oil importer, did not receive any oil from Kazakhstan in February. Previously, the country was a regular buyer of CPC Blend, consuming an average of about 3-5 mln barrels per month over the past decade.
CPC Blend oil from the port of Novorossiysk was delivered to South Korean ports via the Suez Canal. Since late 2023, due to Houthi attacks, tankers have taken a longer route around the Cape of Good Hope instead of the Suez Canal. South Korea's largest refining company, SK Innovation, and its shipping subsidiary, SK Shipping, indicated that the sharp increase in logistics costs for CPC Blend deliveries is a serious concern. They will closely monitor the trend of rising war risk insurance premiums to assess the costs of processing CPC Blend.
March 1, former Vice Minister of Energy Asset Magauov replaced Marat Karimov as the General Director of the International Center for Development of Oil and Gas Machine Building. Magauov is a graduate of the Gubkin State University of Oil and Gas in Moscow.
Over the years, he has held various positions, including Vice Minister of Energy (2008-2011, 2016-2017) and General Director of the KazEnergy Association. From 2019 to 2023, he served as Vice Minister of Energy.
The IMB Center is an association whose members are major oil and gas operators: NCOC, KPO, and Tengizchevroil. The center's mission is to promote the development of oil and gas product manufacturing in Kazakhstan by linking major operators with the engineering industry.
March 1, Zhomart Zhasanov was appointed General Director of GPC Investment LLP, a subsidiary of QazaqGaz, which is implementing the construction of a gas processing plant at Kashagan. Previously, he served as Deputy General Director of the company. In prior years, he led the development of the Rozhkovskoye field and, from 2019 to 2020, served as the First Deputy General Director of Ural Oil and Gas LLP.
Starting March 1, crude oil's export customs duty (ECD) increased to $83/ton from February's $79/ton. The rate increase is related to the price rise for Kazakhstan's KEBCO crude (cif Augusta) and Dated Brent during the price monitoring period from December 20 to February 20, reports Argus. During this period, the price rose from $79/barrel to $83/barrel, according to data from the Kazakhstan Ministry of Finance, which is used to calculate the ECD.
Romanian asset of KazMunayGas, Rompetrol Rafinare, announced a loss of $270.5 mln in 2023. Rompetrol Rafinare, which owns the two largest refineries in Romania (Petromidia and Vega) and gas station networks in Romania, Moldova, Bulgaria, and Georgia, engages in oil trading, refining, and wholesale and retail sale of oil products. From 2019 to 2023, the company recorded a consolidated net loss of $705 mln, with the only profitable year being 2022, when Europe's refining margin surged, resulting in $90 mln in net profit. However, immediately after, the Romanian government imposed a special "solidarity tax" on Rompetrol Rafinare of 60% of the net profit from the amount exceeding the company's average net income by 20% from 2018-2021. The company confirmed that this tax was paid to the Romanian state budget amounting to $126 mln, along with a compensatory payment of $35 mln for the rise in fuel prices.
For 2023, the "solidarity tax" with the Romanian people amounted to $31.1 mln.
As of March 1, Bulgaria officially stopped receiving oil from Russia. The country had the right to import crude oil for the Burgas refinery, owned by Lukoil, via the Black Sea from Novorossiysk until the end of 2024 but prematurely relinquished this right. Until 2021, this refinery operated on 50% Russian Urals crude, with the remaining 50% from other grades.
Currently, the refinery processes oil from Kazakhstan (CPC Blend, KEBCO) and Middle Eastern countries, purchasing batches of Arab Light, Iraqi Basrah Light, and Tunisian Halk El Menzel in January-February.
Lukoil has already announced that it is considering selling the refinery. Potential buyers include American companies, Polish Orlen, Azerbaijani Socar, and KazMunayGas.
Giancarlo Ruiu officially assumed the position of Managing Director of NCOC, replacing Olivier Lazare, who had held the position since June 2021.
Ruiu has over 20 years of experience managing oil and gas assets in Kazakhstan and internationally. Giancarlo graduated from the University of Pisa (Italy) with a Master's degree in Civil Engineering.
Ruiu joined NCOC from the position of General Director at Karachaganak Petroleum Operating B.V. Previously, he held positions such as Head of Onshore Operations at the Eni/ADNOC joint venture in Abu Dhabi, Managing Director at Eni Ghana, and Director of Phase 1 Development at NCOC.
Global Terminal Services (GTS), which operates the Turkish Dortyol terminal on the Mediterranean Sea, announced that it is ceasing operations with oil of Russian origin or shipped from Russian ports amid increased US sanctions pressure, reports Reuters.
This also includes Kazakh oil, which is transported via the CPC pipeline to the port of Novorossiysk. In 2023, the Dortyol terminal handled a record volume of Russian oil, which is usually exported through it to Greek ports Corinth, Elefsis, and Thessaloniki, as well as to Rotterdam and Antwerp.
March 7, in Astana, in the presence of the President of Kazakhstan, Kassym-Jomart Tokayev, and the Minister of Energy of the Kingdom of Saudi Arabia, Abdulaziz bin Salman Al Saud, an agreement was signed between the Government of the Republic of Kazakhstan and the Government of the Kingdom of Saudi Arabia for the implementation of a joint project to build a wind power plant.
Construction of the new 1 GW wind power plant will begin next year by Saudi ACWA Power, with the station scheduled to launch in 2029. The station will be located in the Dzungarian Gate area – a mountain pass between the Dzungarian Alatau to the west and the Barlyk Range to the east. The 50 km long and 10 km wide corridor forms a natural wind tunnel where strong winds blow constantly. ACWA Power's energy portfolio includes 77 assets in 12 countries.
March 11, during the state visit of Kazakhstan's President K.-J. Tokayev to Azerbaijan, an agreement was signed between Samruk-Kazyna and the Azerbaijan Investment Holding on a strategic partnership to create an investment fund for the development of the Trans-Caspian International Transport Route (TMTM), which would allow Kazakh oil to reach global markets bypassing Russia. The new fund is expected to be registered at the AIFC.
March 11, in Baku, KazMunayGas and SOCAR signed several important cooperation documents. The agreement on phased increases in transit volumes increases the shipment volumes of Kazakh oil via the Aktau-Baku-Tbilisi-Ceyhan route to 2.2 mln tons per year. The agreement signed in 2022 provided for the transportation of 1.5 mln tons of oil per year via this route. The development of this export direction was hindered by high tariffs for third-party shippers through BTC, along with the unprepared infrastructure.
As part of the signed agreement, the parties agreed to continue discussions on tariff reductions and the transportation of Kazakh oil via the Baku-Supsa route.