KazMunaiGas expects output shortfall due to a strike

Kazakhstan's State oil and gas company, KazMunaiGas, expects its production and planned output to fall by 4 per cent as a strike in one of the country's major oil fields enters its second month. The strike in Uzen field in western Kazakhstan, which commenced on 26th May, has already caused oil production losses of 150,000 tonnes.

The group's London-traded arm KMG EP released a statement, saying: "The company now believes that annual production from the Uzen field will not reach the target level and will be lower by at least 600,000 tonnes." It added that the other “small offsets” would also contribute to the 4 per cent shortfall in the earlier output forecast.

At the peak of the protests, in the field in the Mangistau region, the numbers of people involved were estimated at 2,500 but have now reportedly fallen to 650. KMG EP said that KazMunaiGas will start negotiations upon "complete cessation of illegal protests".

The strike, over labour a dispute, is the second one to affect KazMunaiGas' operations in the Mangistau region in the past two months.

KMG EP, Kazakhstan's second-largest oil producer, had earlier forecast crude oil production of 13.5 million tonnes in 2011. Last year, the company produced 13.3 million tonnes, equal to 270,000 b/d.

Sources: Reuters, Bloomberg, Upstream Online

For more news and expert analysis about the Caspian region, please see Caspian Focus.

Kazakhstan: Profits double for KMG

Last year was an exceptional one for NC Kazmunaigas, which saw net profits more than double year on year to $2.73 billion, compared to $1.29 billion in 2009. No reasons were given for the huge rise, though the rise in global oil prices was clearly a key factor.

KMG, which owns a 62 per cent stake in its London listed affiliate KMG EP, also benefited from a rise in production from the Chevron-led Tengizchevroil joint venture, in which it holds a 20 per cent interest.

KMG, which has a very good credit rating and an unblemished repayment record, needs to raise billions of dollars in extra financing over the next four to five years to meet its cash calls for the Kashagan project, in which it holds an 18.6 per cent interest. The company is in the market for a $1 billion-plus loan that will refinance some of its existing debt.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2011 Menas Associates