Page 5 - FSUOGM Week 01 2021

FSUOGM COMMENTARY FSUOGM

OMV Petrom exits Kazakhstan,

sets sights on Black Sea

OMV Petrom is leaving the Central Asian country after two decades

KAZAKHSTAN AUSTRO-ROMANIAN oil firm OMV Petrom
has struck a deal to exit Kazakhstan after over
WHAT: two decades working in the country, as it looks
OMV Petrom has agreed to shift its focus to operations in the Black Sea.
to sell its Tasbulat and OMV Petrom has agreed to sell 100% inter-
Komsomolskoye assets in ests in Kazakh subsidiaries Kom-Munai and
western Kazakhstan. Tasbulat Oil to a private company based in
Nur-Sultan called Magnetic Oil. Kom-Munai
WHY: controls the Komsomolskoye oilfield in Kazakh-
The company has not stan’s Mangistau Province bordering the Caspian
seen further expansion in Sea, while Tasbulat Oil manages the nearby Tas-
Kazakhstan and wants to bulat concession containing the Aktas, Tasbulat recognised the damage such policies have
concentrate on the Black and Turkmenoi deposits. caused, with a parliamentary committee voting
Sea instead. The fields produced some 6,450 barrels of oil in late August to reverse some of the negative
equivalent per day (boepd) last year, equivalent changes in the legislation. But the revisions are
WHAT NEXT: to 4% of OMV Petrom’s total output. Most oil is yet to become law.
OMV Petrom's flagship pumped via the Uzen-Atyrau-Samara pipeline to Despite difficulties, though, OMV Petrom
project moving forward is Russian ports, while the rest is sold domestically. earlier this year acquired a 43% stake in the Han
Neptun Deep off Romania. OMV Petrom, whose largest owner is Aus- Asparuh block in Bulgarian waters adjacent to
trian oil group OMV, entered Kazakhstan in Neptun Deep from its parent OMV. An oil dis-
1998. Its withdrawal now comes after a number covery was made at the Total-operated site in
of years of disappointing investments in the Cen- 2015, and OMV Petrom’s move appears aimed
tral Asian country. at improving Neptun Deep’s economic case by
Production rates at the Tasbulat fields have adding more resources to the project.
been constrained by operational issues, includ- OMV Petrom also won a contest in June to
ing pipeline leaks and unsuccessful drilling. explore a 5,282-square km area offshore Georgia,
Meanwhile, a water injection programme at the and began negotiations for a production-sharing
larger Komsomolskoye field has failed to boost agreement (PSA) for the site in October. Unlike
output as hoped. Bulgaria and Romania, Georgia is yet to make
OMV Petrom’s production in Kazakhstan has any oil and gas finds in the Black Sea.
been in decline for several years. It first emerged Austria’s OMV holds a 51% stake in OMV
that the company was seeking a buyer for the Petrom, while the Romanian state controls
assets in January, with US investment bank 20.6% and state-backed investment fund Fondul
Jefferies hired to assist with the sales process. Proprietatea owns 10%. The remaining equity is
Despite its setbacks, OMV Petrom said at the split between smaller shareholders.
time that the assets had “growth opportunities”, The company is the largest oil and gas pro-
including from improved oil recovery. ducer in south-eastern Europe, but most of the
“The business has been stable, but no further roughly 150,000 boepd of oil and gas it produces
in-country expansion has been realised in the is at mature onshore fields in Romania. Until its
last few years, and OMV Petrom has decided to Bulgarian acquisition, its international upstream
shift the focus of its international upstream busi- footprint was limited to Kazakhstan.
ness to the Black Sea,” the company said. Like parent OMV, OMV Petrom appears to
be shifting its focus from oil to gas, given that the
Black ops Black Sea is very gas prone. Besides Bulgaria and
OMV Petrom’s prize asset is an 84bn cubic metre Romania, Turkey is also hoping to establish gas
gas discovery at the Neptun Deep block in the production in the Black Sea after making what it
Romanian Black Sea, where it is partnered with claims to be a 405 bcm discovery at the Tuna-1
US major ExxonMobil. The project has been in well in August. Ukraine and Russia have also
limbo ever since Romania’s government intro- found gas reserves offshore.
duced a controversial offshore law in late 2018 Gas is widely forecast to see much stronger
imposing extra tax and sales restrictions on gas growth in demand over the coming decades
producers. than oil, which is expected to cede ground in the
Romanian authorities appear to have energy mix to cleaner fuels. ™

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