Fast Market Research recommends "Kazakhstan Oil & Gas Report Q4 2013" from Business Monitor International, now available

Boston, MA -- (SBWire) -- 10/25/2013 --We maintain our optimistic on Kazakhstan, although we continue to underline risks related to resource nationalism and geological complications on major prospects that could deter foreign investors. Kazakhstan's choice to block the sale of ConocoPhillips' Kashagan stake in order to allocate it to CNPC illustrates the uncertainty of the business environment that surround the country.

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

- Kazahstan has been strengthening its trading ties with China. Kairgeldy Kabyldin, head of KazTransOil, seems to have made a clear choice, as he declared in early March plans to increase oil exports to China by one-fifth in 2013. The decision to prioritise CNCP over ONGC for the acquisition of ConocoPhillips' Kashagan stake supports the view that Kazakhstan is supporting a stronger integration with China.
- KazMunaiGas (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 15.3bcm 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 16.6bcm in 2017, creating increasing risk that the country will have to rely on imports.
- Output at Kashagan is set to start before the end of 2013 and is expected to reach about 370,000 barrels per day (b/d) during first-phase expansion and rise to 450,000b/d by 2015 or 2016. State oil and gas group KMG believes the Kashagan field expansion could be completed by 2018-2019. However, we decided not to include this in our forecast considering the significant risks of delays affecting field developments in the country.
- 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 2.03mn b/d in 2016 and 2.26mn b/d in 2020.

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