Since January 1 the Treaty on the Eurasian Economic Union (EEU) signed by Russia, Belarus and Kazakhstan has entered into force. Four key economic freedoms have begun operating on the territory of the Union: freedom of movement of goods, services, capital and work force. In addition, member-countries to the Treaty undertook to pursue an agreed policy in key sectors of the economy: energy, industry, agriculture, transport. According to the agreements of the member countries, a common pharmaceutical market should be created in 2016, a common electricity market –by 2019 , the market for oil, gas and petroleum products –by 2025.
Since January 1 Kazakhstan has imposed a ban on the export of petroleum products for a period of 6 months. According to the Press Service of the Ministry of Energy, a ban on the export from the territory of the Republic of Kazakhstan "of light distillates and products, middle distillates, kerosene, gas oil, diesel fuel and other petroleum products, except for home heating oil outside the customs territory of the Customs Union" has been imposed.
On January 8, Roxi Petroleum announced that along with other shareholders to Galaz block, it was holding talks with Xinjiang Zhundong Petroleum Technology Co under conditions for implementation of Galaz Block. Xinjiang is interested in acquiring 100% of Galaz Field for an amount not more than $ 100 million, including equity capital and debts. Conclusion of the transaction requires conducting pre-investment analysis (due diligence), as well as solving a number of legal issues. Roxi will provide a further report on the status of the transaction.
Drilling of the first 1,600 m deep appraisal well on the Rakushechnoye-More structure has started in the Kazakhstan sector of the Caspian Seaon the N Project , as reported by KMG press-service. N Block is among the promising KMG’s projects in the Kazakhstan sector of the Caspian Sea. A contract for subsoil use is currently concluded with respect to the project. N Block is located on the Caspian Sea, in 30 km to south-west of Aktau. The land plot area isapproximately 8100 sq. km. The project operator will be LLP established in Kazakhstan, which will belong to all the project participants in proportion to their respective equity shares under the subsoil use contract. According to the signed subsoil use contract under the N Project, currently the project participants are KMG with 75.5% of shares and Oil & Gas N Block Kazakhstan GmbH with–24.5%.
On January 13 , as per resolution of the Board of Directors of Embamunaigas, Kurmangazy Iskaziyev has been appointed as the company’s CEO, previously he held the position of Managing Director for Geology, the Chief Geologist of KazMunayGas JSC. Powers of the CEO Makhambet Dosmukhambetov were early terminated due to his transfer to another appointment. In 1993, Kurmangazy Iskaziyev graduated from the oil faculty of the Kazakh Polytechnic Institute named after V.I.Lenin In 2006, he earned a degree of candidate of geological and mineralogical sciences in the Tomsk Polytechnical University. He began his labour activity in 1985 in "Embaneft" production association. From 2004 to 2008, he held the post of Deputy Director and then Director of the Geology and Development Department of KMG EP. After that he held positions such as Executive Director for Gas and Oil Production, Managing Director for Geology, Geophysics and Resevoirs, Chief Geologist of NC KazMunayGas JSC.
On January 13 , an extraordinary general shareholders meeting was held by KazMunaiGas Exploration and Production JSC, where the resolutions on change in the directorship were made. In connection with early termination of powers of a member of the Board of Directors - the Chairman of the Board of Directors of KMG EP Daniyar Berlibayev, Christopher Simon Hopkinson, the first Deputy Chairman of the Board of the National Company KazMunaiGas JSC (NC KMG), has been elected as a member of the Board of Directors. Mr. Christopher Hopkinson was nominated by the majority shareholder because of the fact that in NC KMG he administers development strategy and operations of the subsidiaries, affiliates and jointly-controlled oil and gas enterprises, coordinates implementation of programmes on oil production, as well as the resource base increase and upstream exploration, technical evaluation of existing and newly acquired oil and gas projects in Kazakhstan and abroad, coordinates international cooperation in oil and gas exploration and production, as well as technology transfer in the framework of international agreements. Hopkinson has been working in the oil and gas industry since 1980. Prior to joining KMG, he held posts of the Director General of the International Petroleum Company, the CEO of Imperial Energy and the First Vice President for the North African Assets of the BG Group. Earlier in his career, he held various positions in Shell and TNK-BP companies. Hopkinson studied physics at the University of St Andrews.
On January 20 the powers of the Member of the Board of NC KazMunaiGaz Kurmangazy Oryngaziyevich Iskaziyev were prematurely terminated as per decision of the Board of Directors of KMG. Makhambet Dzholdasgaliyevich Dosmukhambetov was elected a member of the Board.
Zangar Maksatuly Nogaibai has been appointed as the Executive Director of the KAZENERGY Association, as reported by the Press Service of KAZENERGY. Zangar Nogaibai was born in 1979. Master of Law, Doctor of Legal Sciences. In 1999 he graduated from the Kazakh State Law University, the Masters Course – in 2000, and the Doctorate of the University of Bremen – in 2005. He is fluent in English and German. Prior to his appointment as the Executive Director of the Association, he worked as an adviser to the Chairman of the RoK National Chamber of Entrepreneurs (NCE), Member of the Governing Board for the Centre of Arbitration Proceedings of the RoK NCE.
Agency on Statistics of the Republic of Kazakhstan reported that in January 2015 year the following prices fell down: for gas condensateby 22.7%, for oil - by 20.6%, for liquefied propane and butane by 8.2%, for petrol by 0.6%, and for diesel fuel by 0.4%. At the same time natural gas went up by 0.7%, hard coal - by 0.3%.
According to the press service of the company, Serik Yestai is appointed as the first Deputy Director General of KazTransGas JSC. He previously held the position of the Chairman of the Board of Intergas Central Asia JSC. In addition, Yerken Kasseyev is appointed as the Chairman of the Board of Intergas Central Asia JSC, previously he held the post of the Deputy Director General of KazTransGas JSC. KazTransGas JSC is a national operator in the field of gas and gas supply, and is a part of KazMunaiGas.
LUKOIL NC started arbitration proceedings in London against Chinese Sinopec about causing significant damage, as the Russian company informed. Sinopec refused to make transaction on purchase of 50% of Caspian Investment Resources Ltd., which has stakes in four projects for hydrocarbons production in Kazakhstan. The total amount of the transaction is $ 1.2 Billion. The sales agreement signing was announced on April 15, 2014. "Sinopec has refused to complete the transaction that LUKOIL considers as a breach of the contract. LUKOIL has started arbitration procedures in London against Sinopec over causing significant damage", - is stated in the statement issued by LUKOIL. Sinopec already owns 50% of Caspian Investment Resources Ltd. LUKOIL does not comment on the amount of the damage and does not provide other comments. Meanwhile, in the GAAP statements for the first quarter of 2014, LUKOIL reflected the loss on the scheduled sale of stake in Caspian Investment Resources Ltd. in the amount of $358 Million. Completion of the transaction was expected before the end of 2014. When publishing the sales agreement, LUKOIL reported that the price was subject to a number of adjustments as of the date of completion of the transaction, and the transaction itself required obtaining approval of the government bodies of Kazakhstan.
Suppliers of 200 km of pipes for Kashagan will be Japanese Marubeni Itochu Steel Inc. and German Butting GmbH and co. KG, as reported by the "Ak Zhaiyk" newspaper. The publication has become aware of details of work on laying two new pipelines on the Kashagan Project. The Consortium will buy 200 km of pipes made in Japan and Germany, with a total value of more than $ 1Billion. "Our sources report that 70 kilometres of pipes will be procured from Japanese company Marubeni Itochu Steel Inc., which specializes in the production and sale of steelwork. The remaining 130 km are ordered from German company Butting GmbH and Co. KG, majored in the manufacture of longitudinally-welded pipes, pipe fittings, tanks, etc.”, is said in the publication. Due to the duration of manufacturing the contracts with the companies were made in August and October last year. Broken pipes for old pipelines were supplied by Japanese companies Sumitomo and JFE.
A single company named North Caspian Joint Venture (NCJV) will be established on The North Caspian Project to develop the Kashagan Field, Deputy Managing Director of NCOC Zhakip Marabayev reported to Kazinform correspondent. "The structure of the organization is being designed such that to take advantage of the optimization of various functions and strengths of the partners within the project. In order to improve the efficiency and effectiveness of the organizational structure the management and staff will be accommodated in one location. The form of the organization is focused on the development of Kazakhstan staff. Development of local staff is a priority, where the main objective isto increase the number of local staff members and provide them with more leadership positions within the company. All Kazakhstani employees are given opportunities for professional development for formation of sustainable skills and competencies ", -said Marabayev. It is expected that the new operator company will fulfil functions of the currently operating companies NCOC N.V., NCPOC and NCOC B.V.
KazMunai Gas Exploration&Production JSC reported on the signing the additional agreements on the extension of the duration of subsoil use contracts between the RoK Ministry of Energy and subsidiaries and dependent companies of KMG EP. The following four contracts on oilfield development of Embamunaygas JSC were extended: # 37-Kenbay oilfield - until the year of 2041; # 61- South-East Novobogatinskoye oilfield- until 2048; # 211- Botakhan, Makat, Dossor, Tanatar, Kamyshitovoye and etc (totally 22 oilfields)- until 2037; #413-Prorva, Kulsary, Karaton, Koschagyl and etc. (totally 13 oilfields)- until 2043. Moreover, the crude hydrocarbons exploration works contract No. 468 by Ural Oil and Gas LLP, operating at Fedorovsky block, is extended up to 2016 .
On March 16 Condor Petroleum announced that the company had temporarily suspended production at Shoba Field due to the shortage of production facilities in Kazakhstan's oil refineries and low prices on the domestic market for crude oil and petroleum products. Kazakhstani Refineries either don't operate, or offer prices below the cost price of Condor Petroleum, according to the company statement. To reduce the excess on the domestic oil products market, the Government has reduced the export duties for oil and oil products, and has also introduced a temporary ban on the import of petrol and diesel fuel from Russia. The Company is planning to resume production later this year, once commercial contracts for Shoba and Taskuduk will be signed.
China initiated intra-party disciplinary proceedings against the Director-General of the China National Petroleum Corporation (CNPC) Liao Yunyuan, who is suspected of serious violations of discipline and law, as reported by foreign media. According to the South China Morning Post publication, corruption investigation in CNPCS has affected 46 people starting from 2013 onwards. Several top executives were detained, including former CEO of the oil company Jiang Zemin. Anti-corruption campaign in China was initiated by Chinese President XI Jinping. Dozens of high-ranking officials and senior executives of State-owned companies are under investigation now. Different penalties up to death penalty are provided for bribery. In Kazakhstan, CNPC has stakes in the following companies: North Caspian Operating Company, "Manghystaumunaigas", "CNPC-Aktobemunaigaz, Shymkent Refinery and others, as reported by Kaz TAG.
On March 19 official media published a Government Decree on reducing export customs duty (ECD) for crude oil from $80 to $60 per tonne. The decree takes effect from the date of its first publication. So far, the ECD rate for oil in Kazakhstan amounted to $80 per tonne (was raised from $60 in March 2014).
Japanese Marubeni and China's Sinopec had signed a contract with Atyrauneftemash LLP for KZT 1.6 Bn.in Atyrau the General Director of the company Alexander Donskov told the Kazinform correspondent. This contract includes the manufacture and delivery of various equipment to the Atyrau Oil Refinery, where the construction of the oil deep conversion complex is taking place. “It is in very good time for us, because of the difficult economic situation we have not had large orders this year. Now we will not only successfully work further, but will open about 100 new jobs as well. We will need these people to perform a major contract made with Marubeni and Sinopec, " - told Donskov.
Project for Gasification of Astana is temporarily suspended, said Vice Minister of Energy of the RoK Magzum Mirzagaliev. "This project (the construction of a gas pipeline to Astana -KazTAG) is not being implemented yet. Regarding it, It was decided to temporarily suspend. But this does not mean that we are not planning to gasify Astana”, -told Mirzagaliev during a briefing on gas supply issues. At that he noted that the feasibility study and design estimate documentation are already ready and approved, the cost of the the pipeline and the laying route are determined for this project, reports KazTAG. Earlier the Minister of Energy Vladimir Shkolnik reported that the Government of Kazakhstan would still not allocate money for the construction of the gas pipeline to Astana. "There are two options regarding gasification of Astana. The first is-to extend the gas pipeline from the West , and the second -is methane. The Government has not allocated money for that gas pipeline yet, though it is included in the program (of gasification -KazTAG), -its cost is quite high. I think, the most effective and rapid solution will be solving the issue on methane. But the Government does not have money for gasification of Astana in the nearest budget -said Mr. Shkolnik at the Government Hour in the Mazhilis of the Parliament on January 26.
The Ex-Director of the Atyrau Oil Refinery 49-year old Talgat Baitaziev has taken the cahrge of the Rybntisk Metallurgical Plant in Moldova, investing $ 140 Million, according to the Moldovian media. The President of the Pridnestrovskaia Moldavskaia Respublika Yevgeny Shevchuk has announced the appointment of Mr.Baitaziev at the plant, where the first heat took place after the return of the enterprise into State ownership in February this year. According to Shevchyuk, about $140 Million were spend to run the plant from the “extra-budgetary sources”. As the mass media remind, Shevchyuk reported in early February that he had found a new investor willing to invest $30 Million in the purchase of scrap metal and plant start-up. Now the businessman’s name has become known. As we have informed, Talgat Baitaziev headed the Atyrau Refinery from 2004 to 2012. Since 2012 until recently, he was the General Director of Batumi Industrial Holdings Ltd.
On March 30, KazMunaiGas Exploration & Production JSC held another in-person meeting of the Board of Directors. During the meeting, the Board of Directors approved the adjustment to the budget for 2015 and approved the agenda of the annual general meeting of shareholders scheduled for May 19, 2015. The Board of Directors reviewed the budget for 2015 and approved it, based on the average annual price of Brent Grade Oil at $50 per barrel.
On April 1 Karachaganak Petroleum Operating B.V. (KPO) announced on two new appointments to senior management of the company: Renato Maroli replaced Damiano Ratti as General Director of KPO, while Andrew Whiper started to work as Production Director and Deputy Director General. "I would like to welcome Renato Maroli General Director of KPO and Andrew Whiper, Production Director of KPO and wish them success in their work. I'm sure their valuable professional experience and leadership qualities will contribute substantially to the further success of KPO", said Damiano Ratti. Renato Maroli has work experience in oil and gas industry for over 22 years. Immediately prior to his appointment to in KPO, he served as the Chief Executive Officer of Enimed - Eni's subsidiary, which manages the implementation of offshore and mainland projects in the Italian Sicily. Mr. Maroli participated in managing many major projects both in Italy and abroad, for example, in countries such as Libya and Egypt. During his professional career, Renato Maroli also performed various production tasks in the sphere of production of crude hydrocarbons, and in projects related to gas storage. Mr. Maroli has extensive leadership experience in enterprises with different organizational structure, corporate culture and multinational composition of staff. Andrew Whiper has considerable work experience as a senior manager in the technical and management areas, acquired during the years of his professional career at BG Group, Shell and Schlumberger.
By decision of the Board of Directors of Kaztransoil JSC, the Director of Western Branch Ferdinat Mamonov has been released from the position held "due to his transfer to another job". Zhenisbek Lukpanov, the former head of the Eastern branch of Kaztransoil JSC, has been appointed as a new Director of the Western Branch. Zhenisbek Lukpanov was born in 1967 in Sarykamys village of the Atyrau Region. He has a higher education; in 1996 he graduated from the Kazakh National Technical University, candidate of technical sciences. He began his career in May 1986 as an electrician. In April 2000 he was appointed to position of a Chief Power Engineer and transferred to the central administration of Kaztransoil JSC. From February 2004 to October 2004 he worked as the Operation Department Manager. In October 2004 he was appointed as a Deputy Director of the Operation Department. In February 2006, Lukpanov was transferred to the Western Branch of KazTransOil JSC in connection with his appointment to the post of Head of the Mangystau Oil Pipeline Control. From June 29, 2007 - Director of the Eastern Branch of KazTransOil JSC (Pavlodar town).
On April 8 it was announced, The Royal Dutch Shell had agreed to purchase BG Group, the British oil and gas company, for 47 bln pounds ($70 bln). The deal is the largest among all the world’s companies since the beginning of the year and the most expensive in the oil industry over the last decade. It will allow Shell to increase for 25% its proved reserves of oil and gas, join new multi-billion dollar projects, including gas liquefaction plants in Australia, as well as development of deep water fields in Brazil, and reduce the difference in the market value with the world's largest oil company, ExxonMobil. The market capitalization of Shell is $202 bln, BG - $46 bln and ExxonMobil - $360 bln. BG also has the projects in East Africa, Kazakhstan and Egypt. Shell will pay with its cash funds and shares at the rate of 1.350 pence per BG share, representing a premium of about 52% for an average price of the share over the last 90 sessions. The shareholders of BG will own about 19% of the shares of the merged company. Shell will pay a dividend of $ 1.88 per share in 2015, and at least as much as in 2016. In 2017-2020 the Shell company plans to purchase the shares for at least $25 bln.
Tengizchevroil has slowed down the pace of works and has reduced the costs for the future growth project implementation and management of the wellhead pressure at Tengiz Field in the Atyrau Region, as reported by Aidar Dosbayev, Deputy Director of TCO Expansion Project. “The world prices for oil have significantly fallen down. Therefore, in reply to the current situation with oil prices, we have slowed down the pace of works on the project and have reduced costs for 2015", said Dosbayev at the OILTECH Atyrau regional petroleum technology conference in Atyrau. "In any case, the project will continue operating on the most important issue, and it will perform a thorough analysis of the implementation plans and will conduct a cost reduction," he added. "Although we are slowing down the project pace and are reducing costs, our commitments in the area of local content remain unchanged", said the company spokesman. Earlier, it was reported that the Ministry of Energy of Kazakhstan was planning to optimize the TCO extension project. A final decision on financing the TCO expansion project has be adopted before the end of 2015. According to the data of the Ministry of Energy, the new expansion project facilities will be commissioned by 2021.
On April 13 KazMunaiGas Exploration&Production JSC held an extraordinary general meeting (EGM) of shareholders, which elected a new Board of Directors of KMG EP for a 1-year period, until April 13, 2016 inclusive. The meeting appointed Mr Kurtwood Hillman, Managing Director for Operational Production Assets at the National Company KazMunaiGas (NC KMG) to the Board, replacing Mr Timur Bimagambetov as representation of NC KMG on the Board of KMG EP. The composition of KMG EP Board of Directors as of April 14, 2015 is: Christopher Hopkinson-representative of NC KMG, First Deputy Chairman of the Management Board of NC KMG -Chairman of KMG EP Board of Directors; Kurtwood Hillman-representative of NC KMG, Managing Director of Operational Production Assets of NC KMG; Assiya Syrgabekova - representative of NC KMG, Managing Director for Investment and Risk Management of NC KMG; Yerzhan Zhangaulov - representative of NC KMG, Managing Director for Legal Support of NC KMG; Abat Nursseitov -CEO (Chief Executive Officer) of KMG EP; Philip Dayer - Independent Director; Edward Walsh - Independent Director; Alistair Ferguson -Independent Director. During the extraordinary meeting of the Board of Directors, held on the same day, Mr Christopher Hopkinson, the First Deputy Chairman of the Management Board of NC KMG, was re-appointed as the Chairman of the Board of Directors of KMG EP, and as a member on the Nominations Committee under the Board of Directors of KMG EP.
On April 17 at the Yerssai Caspian shipyard (village Kuryk Mangystau Region) a ceremony to celebrate the withdrawal of Satti Jack-up floating drilling rig from the dock, the keel of which was laid down on May 8, 2013. This vessel will be the first floating Jack-up drilling rig, built in Kazakhstan. The rig is planned to be used in Bautino area. “The Caspian profile is heterogeneous: the northern part of the the Caspian Sea, where the Kashagan is located, has small depth, Zhambyl barge operates there, and Satti will allow working at great depths in Bautino area. Also it is suitable for drilling in the Iranian sector of the sea, where the depth reaches 40 m”, –is stated in the report of the Mangistau Region akimat.
On April 21 , KMG Drilling & Services LLP (a subsidiary of KazMunajGaz) and Nabors Drilling International Ltd have established a joint venture company - KMG Nabors Drilling Company for the drilling works at the Tengiz oilfield in Astana. KMG report explains that KMG Nabors Drilling Company was created within the framework of implementing Tengizchevroil LLP liabilities to the Government of the Republic of Kazakhstan, which are reflected in the relevant bilateral memorandum of understanding. The JV shares will be distributed as follows so far: 49% in KMG Drilling & Services, and 51% for Nabors Drilling International Ltd, but the JV will transfer to 50% to 50% mode within 3-4 years, after a certain period of joint work. As per the agreements, TCO will finance the expenditures for acquisition of new drilling rigs for the joint venture. The Head Office of KMG Nabors Drilling Company LLP will be located in Aktau and it will allow to create up to 200 jobs for highly-qualified staff, where 90% of the company's personnel will be the citizens of Kazakhstan.
NC KazMunayGas JSC represented by a subsidiary KMG Systems & Services LLP and Schneider Electric, one of the world leaders in the field of energy management and industrial automation, have created a joint venture –KMG Automation LLP, as reported the press-service of KMG. "The new JV, using local staff, is planning to develop and implement projects to world-class process automation for various industries of Kazakhstan and, especially, for oil and gas complex”, –is said in the statement. The main task of the joint venture will be developing local workforce capacity and deployment of local assembly for systems in Kazakhstan in the field of industrial automation, software and energy management. As expected, KMG Automation will provide the domestic industry with advanced solutions to increase production efficiency and safety.
The Ministry for Investment and Development of the RoK announced its intention to hold the auction to obtain the right of subsoil use in Quarter 2, 2015. According to the information provided, “currently the Ministry is forming a complete list of subsoil areas, except for the subsoil areas containing commonly occurring mineral resources subject to be put up for the auction for the right of subsoil use. After holding this procedure the notices , which will contain the basic terms of the auction, and after the auction - its results will be published in the mass media and on the official website of the Ministry". According to the mass media reports, earlier the Ministry for Investment and Development planned to hold a contest for exploration of about 100 subsoil areas through the auction to attract all investors in April 2015.
Tengiz oilfield , located in the Atyrau Region, has only 8 thousand tons of sulphur remained, as reported by Kazinform news agency, referring to the press service of TCO. "In Quarter 1, TCO sold 910 thousand tons of sulphur that is 146% from the produced 628 thousand tons. The success with sulphur disposal resulted in reduced volumes at the sulphur maps of Tengiz to 8 thousand tons as of March 31, 2015. Currently, TCO sells the high-quality sulphur for the customers in the countries of the Mediterranean basin and Central Asia, Russia, Ukraine and China”, as informs the press service of the Company. Let us remind that in early 2000 's, the sulphur reserves at the Tengiz oilfield reached 9 million tons. For that Tengizchevroil incurred billion-cost fines due to failure to comply with environmental regulations.
The Government of Kazakhstan may exercise the right of redemption of a share, owned by British Gas Group in the Karachaganak Project after its acquisition by Royal Dutch Shell, BG said in its report for 2014. "In the event of changing the control over BG Group, Kazakhstan might declare the right to acquire a share in the Final Production Sharing Agreement within the frameworks of the arrangements for the Karachaganak gas condensate field (BG Group currently owns 29.25%)”– is said in the report of British Gas for 2014, reports KazTAG. On April 8 the Anglo-Dutch oil and gas group Royal Dutch Shell reported that they had agreed to buy the British BG Group for $70 billion. As a result of the merger, BG Group shareholders will receive 19 % share in the merged company. The market value of the incorporated company will reach almost $300 billion. The deal will help Shell to access energy projects of BG Group, including those in Kazakhstan. The Ministry of Energy of the Republic of Kazakhstan reported that the Kazakhstani authorities had no objection to the deal completion and that Shell would be a partner in the Karachaganak Project. On May 4, the RoK President Nursultan Nazarbayev expressed the hope that the changes would affect positively the obligations, undertaken by Shell.