Page 8 - FSUOGM Week 39 2019

FSUOGM INVESTMENT FSUOGM
Condor divests Kazakh oilfields for $25mn
KAZAKHSTAN
Condor’s efforts in Kazakhstan have been undermined by a long- running dispute over a contract extension.
CALGARY-BASED junior Condor Petroleum has struck a deal to sell two oilfields in western Kazakhstan to an undisclosed buyer.
The company has entered into a binding agreement to sell its production contracts for the Shoba and Taskuduk fields and associated field equipment for $24.6mn to “a non-listed interna- tional oil and gas group”, it said in a statement on September 24. This buyer will need to pay a $3.8mn deposit within 10 business days of the deal being signed.
The transaction is anticipated to close in the first quarter of 2020, pending approval from the Kazakh authorities.
Condor discovered Shoba and Taskuduk during a 2011-2012 drilling campaign at its Zharkamys exploration area, and the pair entered production in late 2016. The Toron- to-listed independent produced 596 barrels per day in Kazakhstan in the three months ending June 30, up from 388 bpd a year earlier. The growth was largely thanks to a three-well infill
drilling programme at Shoba, as well as a work- over campaign.
The company’s efforts in Kazakhstan have been undermined by a long-running dispute over its contract for Zharkamys. It has been seek- ing a 630-day extension of this contract, citing an unidentified force majeure event. In May last year, Kazakhstan’s Court of Appeal upheld a pre- vious ruling that the company should be granted this extension. But Condor is still awaiting the contract revision.
Condor did not respond to a request by FSUOGM to comment on its future activities in Kazakhstan. In its statement, however, the com- pany said it intended to use proceeds from the sale to “pursue larger value growth opportuni- ties within the region.” It also intends to pay off some of its credit facility, invest in increasing gas production in Turkey and resume activities at the Zharkamys area. The company posted $3.38mn in sales in the first half of 2019, with production costs of $725,000. ™
POLICY
Russia agrees to compensate Kazakhstan for oil contamination
KAZAKHSTAN
Around 5.1mn barrels of Kazakh crude was spoiled in the oil contamination crisis.
RUSSIA has agreed to provide Kazakhstan with $15 per barrel in compensation for contami- nating Kazakh crude shipped through Russia earlier this year, Kazakh Energy Minister Kanat Bozumbayev told Reuters on September 26.
In late April it was discovered that almost 37mn barrels of oil in Russia’s pipeline system had been contaminated with organic chlorides, chemicals used to boost oil recovery that cause damage to refining equipment if not removed. This volume included 700,000 tonnes (5.1mn barrels) of Kazakh crude, bought mostly by com- modities trader Vitol.
As such, the total compensation payment to Kazakhstan should amount to almost $77mn.
“They just need to finalise the negotiations with producers and that is it,” Bozumbayev said at an energy conference. Russia’s state pipeline operator Transneft will not demand proof of losses from Kazakh shippers, he added.
The energy minister said Kazakhstan was forecast to produce 90mn tonnes (1.8mn barrels per day) of oil next year. Output this year was dis- rupted by maintenance runs at some of the coun- try’s largest fields, including a 45-day shutdown at the offshore Kashagan field and a near one- month closure at the onshore Karachaganak, due
to wrap up on October 13.
Despite these outages, Bozumbayev said this
month that Kazakhstan could produce more than its stated target of 1.79mn bpd this year. He added there would only be “some short-term works” at fields in 2020.
Russia is also discussing compensation with Belarus, the worst affected among its customers in Europe by the so-called dirty oil crisis. Not only did Belarus receive tainted oil, but it had already begun processing the supplies by the time the contamination was discovered. Its two refineries sustained damage and had to scale down production.
Negotiations for compensation have been complicated by the fact that Moscow and Minsk are also locked in a separate dispute over changes in Russia’s tax code that have driven up the cost of oil for Belarus. In addition, the two sides are trying to agree on a price for Russian gas sup- plies next year, with Belarus wanting parity with domestic prices in Russia.
In Russia, national oil producer Rosneft and Transneft have also locked horns over the dirty oil crisis. Rosneft is demanding urgent compen- sation while also criticising Transneft for not having strict enough quality control of oil.™
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w w w . N E W S B A S E . c o m Week 39 02•October•2019