Fast Market Research recommends "Kazakhstan Oil & Gas Report Q1 2013" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 02/15/2013 -- BMI View: Our outlook for Kazakhstan remains broadly optimistic, although we underline growing risks related to resource nationalism. KMG's acquisition of a 10% stake in Karachaganak will greatly improve the upstream environment, particularly for the IOCs involved in the project, but other examples of growing state control over the sector are indicative of a worrying trend.
The main trends and developments we highlight for Kazakhstan's oil and gas sector are:
- As of early October 2012 US major ConocoPhillips was rumoured to be seeking an exit from Kazakhstan's giant Kashagan field. Oil and Gas Minister Sauat Mynabayev confirmed that the US firm had 'informed that [it has] the intention of selling' its 8.4% stake in the troubled offshore field in the Caspian Sea. The reported exit from the giant Kashagan field reiterates the regulatory risks of operating in Kazakhstan. Should Kazakhstan's operating environment grow more hostile, this could lead to a fall in private interest in the country and slow down exploration and development of its huge oil and gas potential.
- Protests and strikes erupted in late-2011 in the oil-rich province of Mangystau, which accounts for about 30% of Kazakhstan's estimated 1.63mn barrels a day (b/d) of production output, have now completely died down and the majority of the oil workers fired by KazMunaiGas (KMG) have been reinstated. The movement had a minimal impact on the country's oil and gas sector: there were no reports of foreign operators being affected and even KMG suffered a fall of just 7% in annual output. The strikes failed to spread to Kazakhstan's pre-Caspian basin where about 60% of the country's resources are located. The reappointment of Prime Minister Karim Massimov and of Oil and Gas Minister Sauat Mynbayev following January 2012 parliamentary elections indicate policy continuity in the hydrocarbons sector.
- KMG's acquisition of a 10% stake in the Karachaganak gas and condensate project for a total pre-tax consideration of US$3bn, including US$1bn in net cash and the settlement of outstanding legal claims against the operating consortium, is a positive move for the foreign companies involved. The deal removes many of the legal uncertainties surrounding their operations in the country and opens the door to the longdelayed third phase of development, which will boost output from the field.
- We forecast that the estimated 2011 gas output of 12.26bn cubic metres (bcm) will rise to 15.79bcm by the end of 2016. Infrastructure bottlenecks and delays to key decisions with regard to associated gas have forced us to moderate our assumptions. However, the country is still set to become a major gas exporter. Our demand forecasts see consumption reaching no more than 12.13bcm in 2016, providing export potential of 3.66bcm.
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