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Kazakhstan Oil & Gas Report Q2 2013 - New Market Research Report

Recently published research from Business Monitor International, "Kazakhstan Oil & Gas Report Q2 2013", is now available at Fast Market Research

 

Boston, MA -- (SBWIRE) -- 04/29/2013 -- Our outlook for Kazakhstan remains broadly optimistic, although we underline growing risks related to resource nationalism and geological complications on major prospects that could deter foreign investors. KazMunaiGaz's acquisition of a 10% stake in Karachaganak will greatly improve the upstream environment, particularly for the international oil companies (IOCs) involved in the project, but other examples of growing state control over the sector are indicative of a worrying trend. Recent divestment by ConocoPhillips of its Kazakh assets further strengthens our expectation that IOCs could move away from the country's hydrocarbons market.

The main trends and developments we highlight for Kazakhstan's oil and gas sector are:

- Protests and strikes erupted in late-2011 in the oil-rich province of Mangystau, which accounts for about 30% of Kazakhstan's estimated 1.6mn 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.
- 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 long-delayed third phase of development, which will boost output from the field.
- We forecast that the estimated 2012 gas output of 11.2bn cubic metres (bcm) will rise to 15.2bcm by the end of 2017. Infrastructure bottlenecks and delays to key decisions with regard to associated gas have forced us to moderate our assumptions. The country's exports are also declining. Our demand forecasts see consumption reaching 16.4bcm in 2017, creating increasing risk that the country will have to rely on imports.
- State oil and gas group KMG believes the Kashagan field expansion could be completed by 2018-2019 - despite government concerns over spiralling costs. Output at Kashagan - with expansion having been repeatedly delayed - will reach about 370,000b/d during first-phase expansion and rise to 450,000b/d by 2015 or 2016.
- According to Oil and Gas Minister Sauat Mynbayev, oil output hit 80.10mn tonnes per annum (tpa), equivalent to 1.61mn b/d, in 2011. The government expects production to hit 90.00mn tpa, or 1.81mn b/d, by 2015, with production levels sustained at 120-130mn tpa (2.41-2.61mn b/d) from 2020 onwards. This is above our forecasts, which see output reaching 1.99mn b/d in 2016 and 2.18mn b/d in 2020.

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