Oil Chronicles
Oil Chronicles. November 2024
November 1, the Ministry of Energy of Kazakhstan signed a subsoil use contract with QazaqGaz and its strategic partner, KOR Oil Company JSC, for the Shalkar block in the Aktobe region. The contract was executed under the Improved Model Contract (IMC), which provides production-phase preferences, making gas projects economically attractive.
This is QazaqGaz’s first exploration project since being designated a national company. Exploratory drilling is planned for 2025 as part of the initial stage of the work program under the contract. KOR Oil Company JSC is a domestic company with over 25 years of experience in subsoil use.
Export duties on crude oil in Kazakhstan decreased by $1 in November, with a drop in export volumes.
The duty rate for November is $76/ton, down from $77/ton in October. Since September 2023, the monthly export customs duty (ECD) rate has been tied to the average price of the KEBCO crude grade.
Kazakhstan’s KEBCO crude and the corresponding ECD rate have declined for the second consecutive month. In September, the duty stood at $82/ton.
Oil export volumes also dropped year-on-year, with January-September figures totalling 51.7 mln tons, compared to 52.7 mln tons during the same period in 2023.
Unlike other oil and gas revenues, ECD payments go directly to the republican budget rather than the National Fund.
November 3, amid a strike at the oilfield services company Kezbi in the Mangystau region, the company’s director, Yerzhan Kezbayev, was detained by law enforcement. According to the Department of the Financial Monitoring Agency for the Mangystau region, he is suspected of embezzling 321 mln tenge allocated by OzenMunayGas JSC for employee wages at the contractor company and evading approximately 1.5 bln tenge in taxes. A criminal case has been initiated for fraud, and investigative actions are underway.
The strike, involving around 90 workers, reportedly halted operations for several days, as noted on social media.
Kezbi is known for its regular labour strikes. In 2021 and 2022, workers staged walkouts demanding wage increases, and the most recent strike occurred in April 2024.
One of the most high-profile incidents occurred in April 2023, when former Kezbi and Berali Mangystau Company employees besieged the Ministry of Energy building in Astana for nearly 24 hours, demanding jobs and new contracts.
November 4, KazMunayGas and the international company Axens agreed to jointly explore the production of sustainable aviation fuel (SAF) in Kazakhstan. KMG CEO Askhat Khassenov and Axens Chairman Quentin Debuisschert signed the agreement.
Axens’ renewable fuel technologies will be considered part of the feasibility study for the "Sustainable Aviation Fuel Production in Kazakhstan" project in 2024-2025. The feasibility study will be developed at the next stage.
Previously, KMG and KazMunayGas-Aero signed cooperation agreements with LanzaJet, a U.S.-based company that already produces SAF using ATJ (alcohol-to-jet) technology, and the Italian company NextChem.
Russian Sibur Holding is finalizing acquiring a controlling stake in Polymer Production LLP.
Polymer Production LLP owns a plant in the Atyrau region that began operating in 2015 and manufactures polymer products (polymer bags, polypropylene, and polyethylene films). The plant uses polypropylene from the nearby KPI LLP facility as raw material. Since December 2023, the national company KazMunayGas has owned 100% of the shares in Polymer Production LLP.
Previously, Sibur Holding participated in the following petrochemical projects in Kazakhstan: KPI Inc. (polypropylene production plant) with a 40% ownership stake, exclusive export rights for polypropylene produced by KPI Inc., and Silleno (construction of a polyethylene production plant) with a 30% ownership stake.
Zhandos Jilkaidarov has been appointed the new Director of KazMunayGas’ Major Oil & Gas Projects Department.
Before this, he headed the raw gas processing department at the national company QazaqGaz.
Zhandos graduated from the University of Tulsa (USA) with a degree in petroleum engineering and is a Bolashak program scholar. He has worked at Agip KCO and the Sakhalin Energy LNG plant and interned at Shell’s production facilities in Oman and Russia. Upon returning to Kazakhstan, he held positions within Samruk-Kazyna structures and, in 2022, led GPC Investment, which is implementing a gas processing plant project at Kashagan.
At KazMunayGas, he will oversee three megaprojects: Tengiz, Kashagan, and Karachaganak.
November 8, KazMunayGas-Aero and BioOperations signed an agreement to implement a project for producing sustainable aviation fuel.
The domestic BioOperations plant is located in Taiynsha, in the North Kazakhstan region. Its bioethanol is a biofuel derived from various types of grain. The plant also processes byproducts of deep grain processing, such as gluten and starch.
Tengizchevroil has disclosed its operational results for January- September 2024.
In the first three quarters of 2024, crude oil production amounted to 21.4 mln tons (171.4 mln barrels). The company sold 951,000 tons of liquefied petroleum gas and over 2 mln tons of sulphur. Almost all of the dry gas produced by Tengizchevroil is supplied to the domestic market. Direct payments to the Republic of Kazakhstan totalled $8.4 bln. During this period, Tengizchevroil purchased goods and services from Kazakhstani suppliers worth approximately $2.2 bln, including over $1 bln under the Future Growth Project – Wellhead Pressure Management Project.
Kazakhstan has extended the ban on the export of liquefied petroleum gas, propane, and butane by road and rail transport for another six months.
The previous ban lasted from May 14 to November 14, 2024.
In October, it was announced that the government also plans to prohibit the export of light distillates (gasoline), aviation kerosene, diesel fuel, gas oils, aromatic hydrocarbons, and bitumen until 2027.
November 12, a batch of Kazakhstan’s KEBCO crude oil was sold for the first time during the Platts window in a daytime trading session. Eni sold 80,000 tons of KEBCO crude oil to the trading company Petraco, with delivery scheduled for November 23-27, at a discount of $1.75 per barrel to dated Brent, according to a Reuters report. KEBCO crude is transported from Kazakhstan via Russian ports in Novorossiysk and Ust-Luga. While KEBCO shares the same quality and chemical characteristics as Russian Urals, it is classified as transit crude and is not subject to Western sanctions, including the price cap and European embargo.
The Platts window is a 30-minute period at the end of the trading day. The price reporting agency S&P Global Platts collects data on transactions and pricing offers in the physical oil and petroleum products markets, which it uses to calculate its daily price benchmarks.
November 12, KazMunayGas and SOCAR signed a strategic agreement on decarbonization. The document aims to foster collaboration between the two leading national companies in implementing decarbonization projects and introducing low-carbon technologies.