Page 17 - FSUOGM Week 03 2021

FSUOGM NEWS IN BRIEF FSUOGM

Aset Irgaliyev.
EASTERN EUROPE The energy minister’s responsibilities Kazakh oil output 130,000
involve negotiations with OPEC and non-
JKX oil and gas output OPEC oil-producing countries, which affect bpd below average
Kazakhstan’s level of oil output.
down by 4.7% in 2020 production due to ongoing

JKX Oil & Gas (JKX LN) reported on Fitch affirms Beineu- power outages
January 18 that its total hydrocarbon output
had reached 9,825 barrels of oil equivalent Shymkent Gas Pipeline’s Kazakh oil production remains 130,000
per day (boepd) in 4Q20, which is 4.1% less barrels per day (bpd) below average amid
quarter on quarter and 10.6% less year on IDR at 'BBB-' with stable winter weather-driven power outages, Reuters
year. Its output in Ukraine fell 8.0% q/q and reported, citing a source familiar with the
24.1% y/y to 4,351 boepd. outlook daily output data on January 18.
In 2020, the company’s output slid 4.7% Oil output in Kazakhstan was restored to
y/y to 10,238 boepd, of which output in Fitch Ratings on January 18 affirmed 1.62mn bpd as of January 17 but still stood
Ukraine was 4,849 boepd (down 13.2% y/y) Beineu-Shymkent Gas Pipeline’s (BSGP’s) 130,000 bpd below the 1.75mn bpd pumped
and in Russia it was 5,389 boepd (up 4.5% long-term issuer default rating (IDR) at prior to the power outages, the report noted.
y/y). 'BBB-' and National Long-Term Rating at Kazakhstan, a party to the OPEC+ oil
JKX's cash position improved 'AA+(kaz)' with a stable outlook. production cut agreement, previously saw its
significantly in 2020 on declining The ratings reflected Fitch’s assessment of oil output decline by nearly 200,000 bpd per
investment activity. As a result, it posted the strong linkage between the company and its day as power outages led to transit disruptions
end-2020 cash of $24.5mn, up from net cash immediate parent KazTransGas (KTG), which at some routes.
of $14.9mn at the year’s start. exerts extensive operational and financial control Kazakhstan’s two main oil fields, Tengiz
The company also reported low yield over BSGP, providing large financial support via and Kashagan, continued to see their
from its two new wells that it drilled in intercompany loans and guarantees. production in decline, the report said. The
Ukraine in 2020, an IG-146 sidetrack of Fitch said the newly built BSGP maintains a third largest oil field Kashagan is set to
NN75. limited exposure to competition, strong market undergo planned maintenance from January
“The company’s 2020 production position and benefits from a cost pass-through 15-27.
result fell in the middle of the range we tariff framework and low maintenance capex Kazakh power company KEGOC said in a
forecasted (down 4.5-5.0% y/y). With no requirements. Its leverage is moderate under statement last week that power outages were
encouraging results from new wells in Fitch's rating case, while Its Standalone Credit taking place in the country’s western areas
Ukraine, the company will continue to show Profile (SCP) is driven by its KTG exposure. KTG on January 15 and that operations were fully
output decline in 1H21 by about 4-6% y/y. is the sole shipper of the pipeline’s transported gas. restored on January 16.
Meanwhile, higher gas prices in Ukraine “BSGP has a strong position as the only route
will enable the company to boost its P&L for Kazakhstan to export gas to China and supply
in the first half of the year and possibly own gas to the southern regions. Kazakhstan's Turkmenistan launches
improve its cash position. At the moment, Soviet-era pipeline infrastructure has large gaps:
it’s not clear whether the company will it mostly connects western producing regions compressor plant to boost
use its accumulated cash to pursue new to Russia, while leaving eastern, central and
drilling operations in Ukraine, or decide to southern regions disconnected,” Fitch said. gas exports to China
distribute some dividends,” an analyst at the “BSGP's sole shipper and major counterparty is
Kyiv-based Concorde Capital brokerage said its 50% shareholder, KTG (national gas pipeline The Malay natural-gas field in Turkmenistan’s
in a research note. monopoly), resulting in a cap on BSGP's SCP.” Lebap Region saw the launch of a gas-
“BSGP operates under five-year regulatory compressor plant on January 15, the State
periods with a cost-based tariff for gas News Agency of Turkmenistan reported.
transmission, which is designed to recover all The plant is meant to help Turkmenistan
CENTRAL ASIA & SOUTH operational costs (including debt repayment) boost its gas exports to China. The China
and provide a return (equal to weighted average National Petroleum Corporation (CNPC)
CAUCASUS cost of capital) on regulated asset base. The tariff attended the plant’s launch ceremony. China
is uniform (covers internal, export and transit is Turkmenistan’s biggest importer of gas.
Kazakh energy minister transportation) and set in local currency. The It receives supplies via the Turkmenistan-
tariff for the next regulatory period of 2020-2024
Uzbekistan-Kazakhstan-China pipeline.
Nogayev keeps his position was approved at end-2019,” Fitch noted. “The annual capacity of 30bn cubic metres and will
The gas-compressor plant will have an
tariff can be adjusted down once a year if actual
after post parliamentary transported volumes are above the plan and/or widen the supplies of natural gas available for
export, the Turkmen Foreign Ministry said.
costs are lower than expected. Upward revision
election resignation is unlikely and only possible in limited cases. gas since 1986. The gas produced there is
The Malay deposit has been producing
Factors such as tenge devaluation, reduction in
Nurlan Nogayev on January 18 was gas transportation volumes and increased costs fed into the Turkmenistan–Uzbekistan–
reappointed as Kazakhstan's energy minister cannot reasonably initiate tariff revision before the Kazakhstan–China pipeline via a 188-km
following the post-parliamentary election next regulatory period.” Malay–Bagtiyarlyk gas line.
resignation of the cabinet on January 18, BSGP is a newly built operational pipeline A total of 290bn cubic metres of natural
according to a presidential decree. with an asset life of over 30 years, which reduces gas have been delivered from Turkmenistan to
President Kassym-Jomart Tokayev the need for major maintenance and repairs in the China to date.
reappointed the majority of ministers from early life of the asset.
the cabinet with the exception of replacing
the economy minister, Ruslan Dalenov, with

Week 03 20•January•2021 www. NEWSBASE .com P17