Oil - The Times Of Central Asia

Viewing results 1 - 6 of 16

Kazakhstan Oil oil export CPC Suspension Kazakh Oil Caspian Pipeline Consortium

Kazakhstan’s Oil Exports Uninterrupted Despite Caspian Pipeline Consortium Berth Suspensions

Despite the suspension of two out of three offshore berths operated by the Caspian Pipeline Consortium (CPC), Kazakhstan’s oil exports are proceeding without disruption, according to the Ministry of Energy of the Republic of Kazakhstan. The ministry stated that there are currently no restrictions on the receipt or shipment of oil through the CPC system. Transshipment is being carried out on schedule via VPU-3, the third remote mooring unit, which has been in operation since 2014. “Shipments are proceeding normally and according to schedule through the VPU-3 offshore mooring device, which remains operational,” the Ministry of Energy announced. Temporary Suspension of VPU-1 and VPU-2 Earlier, CPC announced the temporary suspension of VPU-1 and VPU-2 following an unscheduled inspection conducted by Russia’s Rostransnadzor. The inspections are part of a broader review of marine infrastructure safety across the Azov-Black Sea basin, launched in the wake of an oil product spill in the Kerch Strait in December 2024. Following the inspection, regulatory authorities issued protocols and directives mandating the temporary shutdown of the two berths until the violations identified are addressed. In the meantime, all CPC shipments have been consolidated through VPU-3. Consortium shareholders have been formally notified of the developments. Similar Measures at Transneft Facility The crackdown on safety violations has extended beyond the CPC. The eighth oil-loading berth operated by JSC Novorossiysk Commercial Sea Port (NCSP Group), part of Russia’s Transneft, has also been suspended for 90 days. The suspension followed the identification of safety violations related to the handling of hazardous cargo. Transneft has been ordered to correct the deficiencies by June 30. Strategic Significance of CPC The CPC is Kazakhstan’s most critical export route for crude oil, linking the giant Tengiz Field with the Yuzhnaya Ozereyevka Terminal on the Black Sea. The pipeline stretches 1,510 kilometers, including 452 kilometers within Kazakhstan, and has an annual capacity of up to 81.5 million tons. In 2024, Kazakhstan exported 54.9 million tons of oil via CPC, accounting for approximately 80% of the country's total oil exports. Security Concerns: Drone Attacks Raise Alarms Security concerns continue to loom over the CPC infrastructure. In February, the Kropotkinskaya station was targeted by seven drones. While the Ministry of Energy reassured that oil deliveries remained unaffected, the incident heightened concerns about operational stability. Although Russia and Ukraine later agreed not to target CPC facilities, Russia alleges that its air defense systems intercepted another drone attack on March 24, the third such incident in a month. Oil market analyst Olzhas Baidildinov voiced skepticism about the durability of the ceasefire arrangement. “We shouldn’t count on an end to attacks on CPC infrastructure,” Baidildinov said. “There’s unwarranted optimism in Kazakh media and among some experts, especially against the backdrop of record oil output in February-March. A decline in both oil production and exports seems inevitable, along with a drop in KazMunayGas’ dividend income from CPC and budget revenues.” He also warned that irregular operations could damage infrastructure designed for continuous, stable use. “Oil pipelines are engineered for consistent operational...

Kemerkol Oil Lawsuit Oil field Atyrau region British firm

Britain’s Victoria Oil & Gas Files Multimillion-Dollar Lawsuit Against Kazakhstan

British company Victoria Oil & Gas has filed a multimillion-dollar lawsuit against the government of Kazakhstan under the Energy Charter Treaty. The development was reported by Energy Monitor, a Telegram channel focused on Kazakhstan’s energy sector. Dispute Centers on Kemerkol Oil Field The legal proceedings are registered with the International Centre for Settlement of Investment Disputes (ICSID), a World Bank-affiliated body. The case stems from a longstanding dispute over the Kemerkol oil field in Kazakhstan's Atyrau region. In 2005, Victoria Oil & Gas acquired a 100% stake in the field from Saga Creek Gold Ltd for $8.5 million. After drilling several wells, the company estimated the field’s geological reserves at approximately 15 million tons of oil. Unexplained Contract Termination In 2008, Kazakhstan’s authorities terminated the subsoil use contract without providing an official explanation. That same year, Kazakh company Bakyt Tau purchased the rights to the field from Saga Creek Gold Ltd for 360 million tenge (approximately $3 million at the 2008 exchange rate). In 2016, Bakyt Tau transferred the development license to Up-Nafta Operating for 1.36 billion tenge (nearly $4 million at the 2016 rate). The company continued exploration and drilling operations. By 2022, the State Reserves Commission reported the following: C1 category geological reserves: 2.35 million tons; recoverable: 588,000 tons C2 category reserves: 652,000 tons; recoverable: 29,000 tons As of 2023, actual oil production totaled just 14,700 tons, with 12 active wells and an average water cut of 79%. Legal Strategy or Political Statement? Given the field’s modest reserves and limited output, some experts suggest the lawsuit may be more political than economic. Energy Monitor noted: “The field is clearly not worth hundreds of millions of dollars, unlike the Stati case involving the Borankol and Tolkyn fields. Most likely, the lawsuit has a political context rather than an economic one.” Victoria Oil & Gas first raised the prospect of arbitration in April 2021. The case has now been officially registered under ICSID case number ARB/25/13, signaling the start of formal legal proceedings. Implications for Kazakhstan While the precise amount of the claim has not been disclosed, Victoria Oil & Gas is expected to seek compensation for lost investments and projected profits. However, given the field’s limited commercial viability, many industry observers question the likelihood of a favorable ruling. The case adds to Kazakhstan’s growing docket of international arbitrations, including the high-profile Stati brothers’ case. Analysts warn the dispute could affect the country’s investment climate and its bargaining position in future energy negotiations.

Transit Oil Oil and Gas Decarbonization Azerbaijan

Kazakhstan Agrees to Increase Oil Transit Through Azerbaijan

Kazakhstan’s KazMunayGas and Azerbaijan’s SOCAR have agreed to increase the transit of Kazakh oil through the Aktau-Baku-Ceyhan route in 2025. The decision was made during a meeting in Baku between KazMunayGas Chairman Askhat Hasenov and SOCAR President Rovshan Najaf, where they reviewed progress on the 2022 oil transportation agreement. At the end of 2024, the volume of Kazakh oil transported through Azerbaijan reached 1.4 million tons. Under the new plan, this figure is set to increase to 1.7 million tons in 2025. The expansion will enhance the transit potential of both Kazakhstan and Azerbaijan, while boosting Kazakhstan’s access to global energy markets. Focus on Decarbonization and Energy Cooperation During the talks, the two companies also discussed their strategic partnership on decarbonization, which was formalized at the 29th UN Climate Change Conference (COP-29) in Azerbaijan. The agreement focuses on: Introducing low-carbon technologies in the oil and gas sector. Reducing harmful emissions from energy production. Additionally, discussions covered joint exploration projects, oil and gas production, investment opportunities, and the digitalization of industrial processes. “SOCAR is a key partner of KazMunayGas. Together, we will continue to contribute to global energy security and the stability of hydrocarbon supplies. This partnership will create new transit opportunities through the Caspian region,” said Hasenov. Kazakhstan and Azerbaijan’s Broader Cooperation Beyond oil transit, Kazakhstan and Azerbaijan recently signed an agreement to construct an underwater fiber-optic communication line across the Caspian Sea. The deal was finalized during Kazakh Prime Minister Olzhas Bektenov’s recent visit to Baku. This project, along with the expanded oil transit, highlights the deepening economic and strategic partnership between the two Caspian nations.

Oil restrictions oil export ban

Kazakhstan’s Mini Oil Refineries Urge Government to Lift Export Ban on By-Products

Kazakhstan’s January ban on the export of naphtha, heating oil, and marine fuel should be reconsidered, as it threatens to shut down mini-oil refineries, Muratbek Makhanov, Managing Director of the Oil and Gas Sector and Ecology at the National Chamber of Entrepreneurs (Atameken) has warned. Since January 29, Kazakhstan has imposed an official ban on exporting gasoline, diesel fuel, and certain petroleum products, including to other Eurasian Economic Union (EAEU) member states. The restrictions cover by-products of mini-refineries such as naphtha, used as fuel for tractors, a gasoline additive, or a solvent in paint production, heating oil, and marine fuel. While Kazakhstan operates three major refineries, approximately 30 smaller facilities focus primarily on diesel production, which inevitably results in these by-products. The issue, industry representatives argue, is that these by-products have little domestic demand and are primarily sold for export. “The oil refining process makes it impossible to produce only diesel fuel. Other petroleum products, such as heating oil and naphtha, are unavoidable by-products that now fall under the export ban. Selling them domestically is not viable, which means we may have to suspend production entirely, leading to a diesel fuel shortage,” said Abdymanap Isabayev, a representative of one of Kazakhstan’s mini-refineries. Isabayev proposed maintaining the export ban on diesel fuel while lifting restrictions on by-products. His concerns were echoed by Atameken’s Makhanov. “Restrictions on the export of refined oil by-products, such as naphtha, heating oil, and marine fuel, harm not only the financial stability of mini-refineries but also Kazakhstan’s broader economy. The government must reconsider this ban and allow mini-refineries to export these products,” he said. Makhanov emphasized that selling surplus petroleum products abroad would generate additional export revenues, increasing budget inflows through customs duties, fees, and other charges. Amanbai Sembekuly, another mini-refinery representative, warned that shutting down small processing plants, which primarily refine crude from marginal and unprofitable fields, could also halt oil production at those sites. “This would be a significant loss to the national budget, which is already suffering from lower revenues due to the ban. The export customs duty on our high-sulphur oil products is 2.5 times higher than the duty on diesel fuel, so these restrictions are costing the government money,” Sembekuly said. Kazakhstani naphtha is primarily exported to Turkey, Uzbekistan, Italy, and Greece, where it is refined into diesel fuel. According to industry representatives, similar refining processes could take place within Kazakhstan’s major refineries, but this would require setting up additional processing lines. As The Times of Central Asia previously reported, Kazakh authorities announced at the end of January the liberalization of domestic oil product prices, abolishing 11 regulations that had controlled wholesale and retail fuel prices since 2014. The move is expected to address fuel shortages, which have worsened due to price disparities that drive fuel exports to neighboring markets.

Oil Oil and Gas oil export OPEC Crude Oil

Kazakhstan to Offset Oil Overproduction in 2024

Kazakhstan has pledged to compensate for excess oil production in 2024, reaffirming its commitment to the OPEC+ agreements. At the 58th meeting of the Joint Ministerial Monitoring Committee, Kazakh representatives confirmed the country's readiness to take necessary measures in 2025 and 2026 to meet its obligations under the OPEC+ framework. "Despite increased production this year due to the expansion of the Tengiz field, Kazakhstan remains committed to the OPEC+ agreement and will engage in negotiations with partners in accordance with international law," the Ministry of Energy stated. OPEC+ Efforts to Stabilize the Market The February 3 meeting marked the first OPEC+ gathering of 2025. Participating ministers emphasized that voluntary production cuts, implemented by several member states in December 2024, have contributed to oil market stability. Previously, on December 5, 2024, OPEC+ agreed to extend voluntary oil production limits of 2.2 million barrels per day (bpd) for the first quarter of 2025. The decision was made in response to a seasonal slowdown in demand during the winter months. A gradual easing of restrictions is expected to continue until September 2026. The next OPEC+ monitoring committee meeting is scheduled for April 5.

Banking National Bank Oil OPEC State Budget

National Bank of Kazakhstan Predicts Higher 2025 Oil Prices Than Bank of America

The National Bank of Kazakhstan (NBK) has revised its forecast for 2025 oil prices, lowering the projected cost from $82.5 to $70 per barrel. Despite this adjustment, the NBK remains more optimistic than Bank of America, which recently reduced its 2025 oil price forecast to $65 per barrel. Bank of America’s Forecast Initially, Bank of America analysts projected Brent oil prices at $80 per barrel for 2025, aligning closely with the NBK's earlier forecast of $82.5. However, last week, Francisco Blanch, head of global commodities and derivatives research at Bank of America, announced a significant revision, citing oversupply and reduced demand driven by the global shift toward cleaner energy sources and transportation. The new forecast sets oil prices at $65 per barrel. NBK’s Adjusted Outlook In its updated Monetary Policy Report, the NBK revised its oil price forecast for 2025 to $70 per barrel, compared to an average of $80.3 in 2024. The adjustment reflects weaker anticipated demand from China and OECD countries, coupled with slower global economic growth. The NBK noted that "the relaxation of production restrictions by OPEC+ countries starting in 2025, alongside increased output from North and South America, will likely create a supply surplus in the oil market." External Influences The U.S. presidential election results could also impact global oil dynamics. President-elect Donald Trump and his administration have pledged to sharply increase domestic oil production beginning in January 2025, aiming to reduce petroleum prices. Additionally, Trump has suggested a potential withdrawal from the Paris Climate Agreement, which could further incentivize support for U.S. oil companies. For Kazakhstan, declining oil prices present significant fiscal challenges. According to the Ministry of Finance, the country collected 655.2 billion KZT ($1.2 billion) in mineral extraction tax (MET) from oil companies during the first 11 months of 2024. Oil export revenues contributed approximately 2 trillion KZT ($3.8 billion), bringing total budget revenues from the oil sector to over 2.3 trillion KZT ($4.4 billion) this year. The potential reduction in oil prices could, therefore, have a substantial impact on Kazakhstan’s economy, particularly on its budgetary revenues derived from the oil industry.