Oil & Gas - The Times Of Central Asia

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Energy Kazakhstan Central Asia Oil & Gas Security Export/import Economy NCOC

Kazakhstan Likely To Insist on Revisions to Kashagan Oil Contracts

Kazakhstan is demanding compensation for lost profits from the North Caspian Operating Company (NCOC), the consortium that manages the Kashagan oil field, and arbitration claims have risen to $150 billion. Sources close to Kashagan told The Times of Central Asia that this should send the message to western energy companies that Kazakhstan is looking to revise previously signed contracts. While Bloomberg has reported the sum of the claims, citing people familiar with the matter, Kazakh government officials have declined to comment on the situation, claiming that it is a "commercial dispute." In April 2023, proceedings against the companies developing the Kashagan and Karachaganak fields began as part of a dispute over cost deductions from oil-sale proceeds of more than $13 billion and $3.5 billion, respectively. An additional $138 billion claim relates to the calculation of the cost of oil production "that was promised to the government but not delivered by the field developers," according to Bloomberg. The Ministry of Energy has not yet commented on the new claims. It states that the Kazakh authorities seek to maximize profits from their oil-production projects with the participation of foreign investors, but have been relatively flexible in previous disputes with oil corporations. International sources note that Eni, Shell, Exxon and TotalEnergies have already invested around $55 billion in Kashagan, and currently the field produces about 400,000 barrels of oil per day. NCOC investors, led by Italy's Eni, are convinced that production can be increased to 1.5 million barrels per day. NCOC has stated that it acts in strict compliance with the contract. Representatives of Eni confirmed that the Kazakh authorities have applied to the court for arbitration settlement, but did not disclose details. Earlier, Kazakhstan won a lawsuit against the Kashagan consortium which required them to pay $5.1 billion for damage to the environment. Kashagan is developed by the NCOC consortium, which includes the national company KazMunayGas (KMG) and several foreign energy companies: Eni, Shell (Great Britain), ExxonMobil (USA), Total (France), Inpex (Japan), and CNPC (China). Member of the Public Council of the Kazakh Ministry of Energy, Olzhas Baidildinov believes that the sharp increase in the amount of the lawsuit is a signal from the Kazakh side to the consortium to revise the contracts. "In my opinion, it's obvious that Kazakhstan wants to revise the terms of work on large consortia. At the same time, I have proposed many times to exchange the frozen assets of the Russian Federation for stakes in major projects: Tengiz, Karachaganak and Kashagan. There is a nuance here: for example, the shares in Karachaganak and Kashagan are managed by PSA LLP, which is determined by the authorized body, while the share in Tengiz is managed by KazMunayGas. As we see, on Kashagan and Karachaganak there are arbitration claims filed in international arbitration, there is an environmental issue - but on Tengiz they are silent for some reason. This is either KMG's unprofessionalism, because the amount of investment expense is very high, or some other unknown issues that need...

Russia Oil & Gas Uzbekistan

Uzbek Refineries Abandoning Kazakh Oil in Favor of Cheaper Russian Crude

Uzbekistan is reducing oil imports from Kazakhstan in favor of cheaper Russian oil, according to a report by the specialized, energy-focused Telegram channel, Oil & Gas of Kazakhstan. According to this source, in the first quarter of 2024, companies in Uzbekistan imported 15,200 tons of crude oil from Kazakhstan by rail for processing. In January-March of 2023, imports amounted to 25,600 tons. The main volume of raw materials this year went to the Ferghana refinery. At the same time, Russia's Gazprom-Neft shipped 75,000 tons of oil through the pipeline in transit through Kazakhstan in the first quarter of 2024. This is almost seven times more than a year earlier, when this figure was just 10,700 tons. By the end of 2024, Russia plans a full-year supply volume to Uzbekistan of up to 550,000 tons of oil, against a total of 154,300 tons a year earlier, which will be supplied through Kazakh state oil-pipeline operator, KazTransOil's trunk pipelines. The reason for the growth of supplies is a more attractive price, which is in part pushed down by both the G7's price cap of $60 per barrel on Russian oil exports, and India's disinclination to pay for Russian oil in rubles - which is driving down Russian exports. If oil from Kazakhstan is supplied to Uzbekistan at a discount of $8-9 per barrel relative to the North Sea Dated Brent oil contract, then the size of the discount on Russian crude is reaching $11-12 per barrel.

Russia Kazakhstan Central Asia Oil & Gas Export/import Economy

Kazakhstan Imported 500 Million Cubic Meters of Russian Gas in First Quarter 2024

In the first quarter of 2024 Kazakhstan took delivery of 500 million cubic meters of Russian gas, according to a report by the Ministry of Energy of Kazakhstan, who said that the import of blue fuel from Russia is under a contract between state energy companies JSC QazaqGaz and PJSC Gazprom. According to the agreement between the companies, fuel imports are made only when necessitated by the gas demand of the domestic Kazakh market against the background of peak consumption in winter -- and exclusively at the request of the Kazakh side. According to QazaqGaz, the wholesale cost of Kazakh gas is more than 60% higher than the retail price in the country. At the end of last year, the national company incurred $392 million in losses from the sale of natural gas on the domestic market. Experts say that the possibility of gas shortages in the country depends on the growth rate of domestic consumption and stability of commercial fuel supplies from domestic natural gas producers. If there is a shortage, it can be covered by imports assured by the national company. However, in order to prevent shortages of gas in the medium and long term, QazaqGaz has increased its commercial gas reserves, started to develop new fields, and undertaken construction of new -- and refurbishment of existing -- gas processing and gas transportation facilities. Earlier, Boris Martsinkevich, an energy expert and editor-in-chief of the Russian publication Geoenergetika, described Kazakhstan as a gas-dependent country. In his opinion, 2024 will be a milestone year for Kazakhstan. This is the year when Kazakhstan's fields will not be able to meet the needs of the domestic market. Martsinkevich's statements were made against the backdrop of a sharp decline in gas exports and an increase in gas imports.

Uzbekistan Economy Export/import Afghanistan Oil & Gas Central Asia Energy

Poor-Quality Gasoline Refused by Taliban Doesn’t Belong to Uzbekistan

The Customs Committee of Uzbekistan denied that gasoline returned by the Taliban due to its poor quality in fact belongs to Uzbekistan, according to a post on the committee's Telegram channel. The Times of Central Asia has reported that the Taliban returned 120,000 liters of gasoline imported via the Hayraton border point to Uzbekistan due to its poor quality. It has been reported that the returned oil products didn't originate in Uzbekistan. On the contrary, 120 tons of gasoline loaded in two tanker trucks were sent to Afghanistan from Russia and moved through the territory of Uzbekistan only in transit mode. On February 7, these tankers left for Afghanistan through the Ayritom station in Surkhandarya, Uzbekistan. These oil products returned by Afghanistan entered Uzbekistan on April 6 through the Ayritom station. Also, the Customs Committee asked certain mass media operating in the country not to distribute unverified, one-sided, unconfirmed information. “At this point, we ask the mass media to study carefully before disseminating such information, taking into account the friendly relations between the two countries,” the Customs Committee report said.

Rule of law Oil & Gas

Kazakhstan Increases Amount of Claim Against Western Oil Companies to $150 Billion

Kazakhstan is demanding compensation for lost profits from the operating consortium of the Kashagan oil field, North Caspian Operating Co (NCOC). Arbitration claims made by Kazakhstan have grown to $150 billion, Bloomberg reports, citing people familiar with the story. An additional claim concerns $138 billion of lost profits stemming from volumes of oil promised to the Kazakh government but not provided by the developers of the field due to delays in Kashagan's startup and production growth. According to the Bloomberg's source, Kazakhstan's claims are also related to problems with the infrastructural arrangement at the Kashagan field, disruptions of production deadlines and cost overruns. "There is another compensation claim related to contracts for the development of Kashagan. They allegedly saw signs of corruption in [the contracts]," the source told Bloomberg. The international scandal underscores the complexity of operating in Central Asia's largest oil-producing country, according to Bloomberg. "Here, large international companies face difficult environmental and geological conditions, as well as a government that is committed to maximizing profits from signed production-sharing agreements," reads the article. Despite the published information, the Ministry of Energy of Kazakhstan isn't disclosing the details of the conflict, calling it a purely commercial dispute. The parties in the consortium NCOC, which includes Eni, Total, ExxonMobil, Shell, China National Petroleum Corp. (CNPC), Japan's Inpex and Kazakh state oil & gas producer, KazMunayGas, believe that they have acted in accordance with the contractual agreements. Earlier, Kazakhstan filed a number of claims in international arbitration against the operators of the Kashagan and Karachaganak oil fields. The claims cover the period from 2010 to 2019.

Uzbekistan Economy Export/import Afghanistan Oil & Gas

Taliban Returns 120,000 Liters of Uzbek Oil Products Over Low-Quality

The National Department of Standards of Afghanistan has reported that it returned two tanker trucks worth of oil products with a volume of 120,000 liters from the port of Hairatan back to Uzbekistan. According to Radio Television of Afghanistan (RTA) English, the reason for this was the low quality of the imported refined products. Furthermore, the National Administration of Standards sent back another 19 oil tankers from Sheikh Abu Nasr Farahi Port to Iran over their low-quality. The standards board once again asked Afghan businessmen to prevent the import of low-quality goods into the country. In January of this year, it was reported that the Taliban returned more than 62 tons of low-quality oil to Uzbekistan through the Hairatan border point. In response to this, Uzbekneftgaz Chairman Bahadir Sidikov said the report was misinterpreted, and that the oil products returned by the Taliban was of high quality. Sidikov stated that the product was returned not because of its low quality, but because its standard isn't available in Afghanistan. "This new product was supposed to enter the Afghan market. Unfortunately, the first batch was sent back. But it’s a process. It will not be easy to enter every market. To prove the quality of this product, we sold 1,000 tons of the same diesel to Estonia last month. They received it as a “premium” and ordered 10,000 tons [more]. Currently, we are producing 10,000 tons of [oil] products. In addition, there are inter-governmental agreements," commented Sidikov at that time.