Kazakhstan Chamber of Commerce in the USA

KazCham



Kazakhstan Daily News Roundup – September 3, 2010 0

Posted on September 03, 2010 by KazCham

HEADLINES:

BTA Bank completes debt restructuring
(SRI) – BTA Bank, Kazakhstan’s third-largest lender, said on Wednesday it had completed the restructuring of its $16.7-billion debt, reducing its liabilities to $4.2 billion.

A bazaar business
(bne) – Border closures after the Kyrgyz revolution and Kazakhstan’s entry into the Customs Union with Russia have presented challenges for Central Asia’s hundreds of thousands of bazaar vendors and shuttle traders this year. But the region’s multi-billion-dollar bazaar trade has always proved to be enormously flexible.

Vale to explore for Kazakh copper, gold with Tau-Ken Samruk
(SRI) – Vale SA, the world’s largest iron ore producer, will search for copper and gold in Kazakhstan together with Tau-Ken Samruk, the state-owned mining holding, Bloomberg reported on Thursday citing a government official.

ENERGY:

Pavlodar refinery net income rises in H1 (SRI)

CPC revises up September crude shipments 5% to 2.7 million tons (Dow Jones – NASDAQ)

Tethys Petroleum up 3.5% on Kazakhstan operations update (Proactive Investors)

Max Petroleum gets extension to Blocks A&E licence exploration period (Oil and Gas Eurasia)

Kazakhstan to develop regulations for operation and safety of oil pipelines – PGO (Interfax)

BUSINESS AND ECONOMY:

Halyk to buy back shares from government by end of 2010 – CEO (SRI)

Tau Capital buys stake in Kazakh pharma distributor (SRI)

Kazakh leader urges restraint in public spending (Reuters)

Kazakh grain looks beyond drought to new markets (Reuters – Forexyard)

Kazakh Ministry of Industry terminated 43 subsoil use contracts since January 2010 (Interfax)

Kazakhstan to double exploration funds in 2011 (Interfax)

Kazakhstan to tighten banking controls (RIA Novosti)

Ulf Wokurka appointed new Head of Deutsche Bank Kazakhstan (The Financial)

METALS AND MINING:

Kazakhstan hopes KazakhGold conflict will be resolved by September (RIA Novosti)

POLITICS:

Kazakhstan to prepare everything for OSCE summit – Nazarbayev (Itar-Tass)

SOURCE: http://silkroadintelligencer.com/2010/09/03/kazakhstan-daily-news-roundup-september-3-2010/

Kazakhstan Daily News Roundup – August 25, 2010 0

Posted on August 25, 2010 by KazCham

HEADLINES:

U.S. judge rejects BTA Bank’s bid to stop lawsuit
(SRI) – A federal bankruptcy judge has denied BTA Bank’s attempt to use U.S. bankruptcy law to shield it from an overseas legal proceeding, a ruling that limits the reach of the U.S. bankruptcy court in foreign insolvency disputes.

CPC may borrow $1 billion to fund expansion
(SRI) – The Caspian Pipeline Consortium (CPC) plans to invest up to $4.6 billion by 2014 to increase the capacity of the CPC pipeline which connects oil fields in western Kazakhstan with the Russian Black Sea port of Novorossiisk, CPC head Aleksander Tarakanov said on Tuesday.

Kazakhstan first in, first out of crisis (bne)

BUSINESS AND ECONOMY:

Average grain yield in Kazakhstan (AgriMarket.Info)

National Bank of Kazakhstan: Exchange rates August 25, 2010 (Kazakhstan Today)

METALS AND MINING:

KazakhGold initiates unscheduled tax audit of Kazakhaltyn subsidiary (Interfax)

POLITICS:

Nazarbayev appoints new head of National Security Committee (Itar-Tass)

Ministries of Internal Affairs and Emergency Situations to devise migration regulation plan (Interfax)

Kazakh official injured in drive-by shooting (RFE/RL)

SOURCE: http://silkroadintelligencer.com/2010/08/25/kazakhstan-daily-news-roundup-august-25-2010/

CPC shipments up 6.5 percent in April 0

Posted on May 08, 2010 by KazCham

(SRI) – The Caspian Pipeline Consortium (CPC), which transports Kazakh and Russian crude to the Black Sea via the CPC pipeline, shipped 760,400 barrels per day in April, up 6.5 percent from March, CPC said on its website.

The consortium transported 22.812 million barrels of CPC Blend CPC-E in April compared to 22.133 million barrels in March.

CPC shipped 34.6 million tons of crude last year and 31.5 million tons in 2008.

The 1,510-kilometer (940-mile) pipeline connects oil fields in western Kazakhstan with the Russian Black Sea port of Novorossiisk. CPC’s capacity is expected to rise to 67 million tons of oil per year, with 50 million tons capacity reserved for oil extracted in Kazakhstan, as part of a $4.5 billion expansion program scheduled to be concluded by 2014.

CPC’s sovereign shareholders are Russia with 31 percent and Kazakhstan with 19 percent.

The remainder of the consortium consists of private companies: Chevron Caspian Pipeline Consortium Company (15%), LUKOil (12.5%), Rosneft-Shell Caspian Ventures Limited (7.5%), Mobil Caspian Pipeline Company (7.5%), Agip International (N.A.) N.V. (2%), Oryx Caspian Pipeline LLC (1.75), BG Overseas Holdings Ltd (2%), and Kazakhstan Pipeline Ventures LLC (1.75%).

SOURCE: http://silkroadintelligencer.com/2010/05/05/cpc-shipments-up-65-percent-in-february/

Maintaining the flow 0

Posted on March 05, 2010 by KazCham

FOR LANDLOCKED KAZAKHSTAN, oil and gas pipelines  are its main export arteries. They will become even  more important once the giant Kashagan field comes -on stream, doubling oil production and opening up  a new era of offshore Caspian Sea oil and gas exports  within the next five years.

Ensuring that another 1.5 million barrels a day of  export pipeline capacity, together with new tanker  routes across the Caspian Sea, are ready by 2015 at  the latest are among the government’s most crucial  strategic goals at a time of intensive infrastructure  development in this vast, thinly populated country.

In Soviet times, and until very recently, virtually  all Kazakhstan’s oil and gas exports were transported -north through Russia. So were the more than 50  billion cubic metres of natural gas, which transited

the country from Turkmen and Uzbek gas fields en  route to eventual markets in Ukraine and Russia  itself, where state-controlled Transneft and Gazprom  stubbornly defend their near-monopoly status against  all comers.

Chevron-Texaco and its partners in the  Tengizchevroil consortium – Exxon-Mobil with  25 per cent, KMG with 20 per cent and the LukArco  joint venture between Lukoil and BP with 5 per  cent – were the first foreign companies to breach the  Russian gas transit company’s monopoly on exports  from Central Asia, when President Yeltsin reluctantly  agreed to the construction of the Caspian Pipeline  Consortium (CPC) pipeline in the late 1990s. In  return for putting up the money, the oil companies  demanded, and were granted, management control of the line to ensure it was run in the interests of  the investing partners, who were also the main  users of the pipeline. At the time it looked like a  revolutionary step – but it did not last long.

The CPC line runs from the giant onshore Tengiz  oil field in northern Kazakhstan, developed by  Chevron and partners, across southern Russia to the Black Sea port of Novorossiisk. A 600km-long spur  line from the giant Karachaganak gas condensate  field to the north east taps into the line to allow  access for BG, ENI and other investors, including  Russia’s Lukoil.

Unlike most Russian pipelines, CPC is run on a  quality bank system. This ensures that high-quality  Central Asian light crude oil and condensate can  be sold at a premium and not suffer the Ural crude  discount. This affects oil delivered through Russia’s  ageing main pipeline system, which mixes the good  with the bad to deliver a lower grade final product.  This is a major disincentive for using the ageing

Soviet-era trunk pipeline system, which Russia did  not upgrade sufficiently during the years of high  oil prices.

Chevron and partners put up more than $2 billion  to build CPC and associated facilities and the Yeltsin  administration allowed Chevron to manage it,  overruling Transneft’s opposition. The Russian and  Kazakh governments received 24 and 19 per cent  stakes in the pipeline and shareholders included  Lukoil through its Arco joint venture with BP.  Stakeholder companies gained access to the pipeline  for their oil exports in proportion to their investment.

But this arrangement did not survive President  Putin’s ambitions to make Russia an ‘energy super- derzhava’ (energy super-power) and the foreign  oil company stakeholders lost both their original  combined majority of shares and their managerial  rights as Moscow bought up the 7 per cent of  shares formerly owned by the Gulf State of Oman  and insisted that management pass into Russian  hands. Moscow argued that the former management  had run a low-tariff regime, which favoured the  international oil companies at the expense of  the Russian treasury. Once in control, Transneft  proceeded to raise tariffs.

Moscow has also made CPC capacity expansion  conditional on support for Transneft’s desire for a  controlling 51 per cent stake in the proposed Burgas- Alexandropolous pipeline. This 220km-long route  is designed to bypass the crowded and ecologically  sensitive Turkish Bosphorous and carry Caspian and  Russian oil from the Black Sea to the Greek port of  Alexandopolous in the northern Aegean, through  Bulgarian and Greek territory.

BP, which has concentrated its Caspian investments  in the Azeri section of the sea much further south,  recently sold to KMG for $250 million the 1.75 per  cent stake in CPC it inherited from its LukArco joint  venture. When added to the 19 per cent already held  by KMG on behalf of the Kazakh state, the state energy h corporation now holds a 20.75 per cent ownership  stake and has the right to export 14.3 million tonnes a -» year through the line, once capacity expansion to  67 million tonnes a year is completer

The BP sale to KMG completes a radical shift in  the power balance within the CPC consortium, with  the Russian and Kazakh state now holding a clear  majority of 54.75 per cent in the pipeline – paving the way for Moscow to give the green light for the long  promised expansion.

Oil started to flow down the CPC line four years ago and some 32 to 34 million tonnes a year can now be  transported down the pipes, thanks to the addition of chemicals to speed the flow. From the start the CPC  project was conceived as a two-stage affair. Technical  plans to double capacity to 67 million tonnes a year,  through additional investment in new pumping  stations and other facilities as production built up  from new onshore and offshore fields, have been  approved, but not the final go-ahead.

Ironically, Russian resistance to expansion proved  a blessing in disguise for the Kashagan consortium.  If Kashagan had come on stream as planned in 2008,  there would not have been the pipeline capacity  to take the oil to export markets. This is a problem  already facing Chevron and partners who have had  to invest heavily in railcars and barges to get rising  volumes of oil from Tengiz to export markets; and  the ENI/BG-led Karachaganak consortium, which  is similarly struggling to find export outlets for  rising production of high-value gas condensate.

Doubling capacity of the CPC oil pipeline and  raising capacity on the traditional Russian export  pipelines north via Samara to connect with the  Druzhba, and other ageing Soviet-era pipelines,  remains an essential part of the planned doubling  in overall export capacity from the North Caspian  basin. Russia will continue to play an important  transit function – and earn increasing transit  revenues – from central Asian oil and gas exports.

But the development of alternative, non-Russian export routes has been accelerated by Moscow’s  delaying tactics over CPC expansion. Moscow will

shortly lose an export pipeline monopoly, which is  a legacy of Soviet times and increasingly resented  throughout central Asia and the Ukraine.

Until now, Moscow has gained most of what it  sought, but at a potentially high longer-term price.  Some analysts say that had Russia kept to the spirit of the original CPC deal and allowed the pipeline to be  expanded as planned, central Asian governments and h oil companies might have been far less determined to h seek alternative export routes. They might also have  been less responsive to the growing interest shown  by China to acquire oil and gas assets in Central Asia,  and build and finance new oil and gas pipelines from  Central Asia east to the Chinese border.

Invest in Kazakhstan An official publication of the Government of the Republic of Kazakhstan, 2009. Pages: 44-50.

Tengiz on the rise 0

Posted on March 05, 2010 by KazCham

PAYBACK TIME HAS arrived at last for the two biggest onshore oil and gas fields in the prolific Pre-Caspian basin in north-west Kazakhstan – Tengiz and  Karachaganak – which are now delivering nearly  half the 70 million tonnes of oil produced annually  by the oil industry in Kazakhstan.

For the best part of a decade, some of the world’s biggest oil and gas companies have been pouring  money, labour and technology into the two complex fields, laid down over several geological time  periods, before being covered by a vast ocean. All that remains of that ancient ocean are the Caspian and Aral seas and the western half of Lake Balkash.

The salt domes and rock reservoirs of the ancient coral reefs, which hold the oil and gas, are now up to 5km below the land surface. But it was the later ocean that laid down the thick cap of flexible, but  impermeable, salt and kept the oil and gas in place.  There it remained under great pressure and mixed  with a lethal cocktail of hydrogen sulphide and  other gases. The rich soup includes ‘mercaptans’,  the volatility and revolting smell of which requires  extensive processing before either oil or gas  can be transported thousands of kilometres to  export markets. Just to make things difficult, Moscow has so  far stubbornly refused to give its assent to the  planned doubling of the 1,600km Caspian Pipeline  Consortium (CPC) export pipeline, specifically  designed to run from Tengiz across southern Russia -» to Novorossiisk on the Black Sea. Karachaganak,  which is closer to the Russian oil and gas town of  Orenburg just over the Russo-Kazakh border than  to Uralsk, the nearest Kazakh town, is linked to the  CPC by a 650km spur line.

A decision on doubling CPC’s capacity to 67  million tonnes a year is believed to be imminent,  but it will take at least two years to build and might  not even be finished in time to transport first oil  from the third giant Caspian project, the offshore  Kashagan ‘elephant’ field, due to start production  around the end of 2012.

Frustrated by Moscow’s delaying tactics, Chevron- Texaco, the operator and 50 per cent owner of  the Tengizchevroil (TCO) consortium set up to  develop Tengiz under a 40-year production-sharing  agreement, has had to invest heavily in thousands of new railcars to export oil the expensive way.

In October 2008, Chevron sent a significant first shipment of oil from Tengiz by rail to the port of  Aktau and pumped it into a small tanker bound  for Baku in Azerbaijan on the western coast of the Caspian. From there it was fed into the 1,750km Baku-Tbilisi-Ceyhan (BTC) pipeline, which runs  through Azerbaijan, Georgia and Turkey.

As capacity builds up in the northern Caspian oil fields, Chevron expects to export up to 5 million tonnes a year to the Turkish port on the eastern  Mediterranean through the BTC pipeline in coming  years, although the bulk of oil from all three of the  giant fields in the Northern Caspian will continue to flow through Russia, once the CPC line’s capacity  is doubled.

Until that symbolic first shipment to Baku and beyond, Chevron shipped surplus oil from Tengiz by rail to Aktau and across the Caspian to  Machachkala, in Russia’s Dagestan province. From there, the oil passed through Russia, either by rail or the re-routed pipeline to central Russia that used to run through the Chechen capital Grozny, but now bypasses it.

This modest opening up of a new cross-Caspian route is the start of something much bigger – the development of an entire new export route to  the west which, for the first time, does not need  to pass through Russian pipelines, railways or  ports. TCO, together with the Karachaganak and Kashagan consortia, is preparing to play a key role  in developing the $3 billion Kazakhstan Caspian  Transportation System (KCTS), now at an advanced  state of planning.

The government’s ambitious southern energy  corridor will run from the giant Kashagan  processing plant at Eskene, 30km north of Atyrau,  more than 600km south to Aktau, and on to the  new oil and gas export facility to be built at Kuryk,  100km beyond Aktau.

From Kuryk, a growing fleet of tankers will take the oil across the Caspian to Baku for onward transit either through the BTC pipeline or by rail and smaller pipeline through Azerbaijan to the Georgian ports of Batumi and Supsa. “With  Kazakhstan expected to add a minimum of 1.5  million barrels a day over the next 15 years,  it needs a new, dedicated and reliable export  capacity, and it needs it urgently,” according to Ian -MacDonald, Chevron’s senior business development and transportation managers

Chevron’s partners in TCO are KazMunaiGaz  (KMG), the state oil and gas company, with 20  per cent and Exxon-Mobil with 25 per cent. The  remaining 5 per cent is held by the Lukarco joint  venture between Russia’s Lukoil and BP. Over the  last five years the partners have invested more than  $3 billion in their ‘second-generation development’  which was completed last year.

Tengiz is operated on the basis of a 40-year  production sharing agreement. The second stage  of its development involved building a small town  to house an army of 6,500 skilled workers. It also  required new road and rail connections, 39 new  drilling wells, a high-tech field production gathering system and eight sour gas re-injection plants.  These house powerful compressors to force sour  gas back into the field. This is required to keep up  the pressure needed to ensure that oil will flow for  decades. Re-injection and related investment has  virtually doubled oil output from 13 million tonnes  in 2004 when construction started, to the current  capacity of 25 million tonnes a year.

Last year’s collapse in oil prices to around $30  a barrel led to many oil companies cutting back  on investment, but Chevron’s board recently  committed to push ahead with ambitious global  development plans and specifically pledged not to  cut back in Kazakhstan.

A series of new wells are being drilled at Tengiz,  together with further exploration of the nearby  Korolyov field. TCO is also planning a state-of-the- art refinery at Tengiz , which fits in well with the  government’s strongly expressed desire to add  value to Kazakh natural resources and develop  downstream processing and refining. A new sulphur processing plant has also removed a source of  friction with the environmental protection agencies, and constant fines. The new pelletisation plant has  converted what used to be embarrassing mountains  of yellow sulphur, which runs blood red when mixed with rainwater, into a valuable by-product.

Invest in Kazakhstan An official publication of the Government of the Republic of Kazakhstan, 2009. Pages: 38-39.



↑ Top