Page 19 - FSUOGM Week 02 2021

FSUOGM NEWS IN BRIEF FSUOGM

rerouting some of the transit business via given the US sanctions that have throttled their Kashagan shares.
its own Nord Stream pipeline that has a 50 oil exports. “Today's decision does not alter the fact
bcm capacity, and that could be doubled if "Due to the restrictions caused by the that Kazakhstan is obliged to pay the award.
work on the controversial Nord Stream 2 OPEC+ deal, our oil production decreased The Kashagan attachment also remains in
pipeline is actually completed. by 8.2% last year," Shahbazov stated at a place,” a spokesperson for Argentem Creek
"The Ukrainian gas transmission system operator meeting chaired by President of Azerbaijan Partners, the largest bondholder of Tristan
is ready to provide a larger volume of transit with Ilham Aliyev. Oil, said. “The Swedish Supreme Court's
the appropriate requests from Gazprom," Makogon Earlier, the energy ministry reported decision upholding the award is final and
wrote on Facebook on January 4. that Azerbaijan would increase daily oil non-appealable. By continuing to invoke
production by 8,000 b/d in February- spurious reasons for not paying, the Kazakh
March, staying in line with its obligations authorities are fighting a battle they lost years
under the OPEC + deal to limit production ago. We expect the Kazakh authorities to pay
CENTRAL ASIA & SOUTH to 595,000 b/d. the award as soon as possible and stop the
Following the start of the deal, the cartel diversionary litigation that damages the image
CAUCASUS relaxed the restrictions to 7.7mn b/d. This of Kazakhstan as an investment destination
week it agreed reductions would amount to and in the process antagonizes foreign
Kazakhstan 96% compliant 7.2mn b/d. investors. As foreign investors, we call on the
leadership of Kazakhstan to intervene and
At the same time, OPEC+ has agreed to
with OPEC+ deal in Dec make decisions on further monthly output resolve this dispute. We stand ready to work
limits, depending on market conditions, but
with them to do so.”
Kazakhstan’s Energy Ministry said on in increments of no more than 500,000 b/d.
January 11 that Kazakhstan was in December The latest deal agreed between OPEC+
96%-compliant with the global OPEC and members allowed Kazakhstan to raise its oil Uzbekistan launches
non-OPEC deal to cut oil output. output levels by 10,000 b/d in February and
The OPEC+ group of oil producers has, March. $982mn urea complex
meanwhile, allowed Kazakhstan to raise
its oil output levels by 10,000 barrels per Uzbek state-owned enterprise Uzkimyosanoat
day (bpd) in February and March as part Dutch top court sets aside has announced the commissioning of its
of a larger agreement struck on January 5 $982mn ammonia and urea production
to roll over existing oil output levels into decision on Kashagan complex in Navoiyazot.
February. Kazakhstan pushed for an output The Navoiyazot facility is one of
increase as the Kazakh economy relies freeze in Tristangate dispute Uzbekistan’s largest chemical plants,
heavily on oil exports and has been hit by producing mineral fertilizers by processing
low global energy demand amid the ongoing The Dutch Supreme Court has set aside the natural gas feedstock. Construction of the
coronavirus pandemic. Amsterdam Court of Appeal's decision related world-class complex began in September 2016
Kazakh oil production, with the exception to an attachment of Kazakhstan's stake (via to replace two outdated and energy inefficient
of condensates which are not covered under its sovereign wealth fund Samruk-Kazyna) in facilities built in the 1960s. The complex
the deal, stood at 6.3mn tonnes in December, the international consortium developing the produced its first urea on December 23.
the ministry said in a statement giant Kashagan oil field - a Dutch entity, KMG “I would like to thank our national and
Kazakhstan’s oil output fell by 4.8% y/y Kashagan B.V. international partners who supported the
to 78.5mn tonnes in January-November. The case was just prior to Christmas construction of the new ammonia and
Oil production this year was originally referred back to the Hague Court of Appeal urea production complex at Navoiyazot.
expected to stay unchanged from last year, for further consideration as the Supreme Commissioning of the new complex was
but this planned trajectory is set to change Court deemed the appellate court's assessment completed within 53 days despite Covid
due to Kazakhstan’s commitments to cut of immunity as based on an incorrect and existing restrictions, a testament
production. Kazakhstan complied with its standard. The attachment, valued at $5.2bn, to the hard work of all involved,” said
commitments to cuts at a rate of 98% in remains fully in place as security for the award Jurabek Mirzamakhmudov, chairman of
November. of more than $540mn, payable to the owners Uzkimyosanoat.
and bondholders of Tristan Oil. “This world-class industrial facility is another
The Kazakh government, in 2010, step towards natural gas monetization via the
Azeri oil output falls 8% in nationalised assets associated with Tristan production of export-oriented and high value-
Oil, a company primarily set up for funding
added products – and the first urea production
2020 oil and gas projects in Kazakhstan. An is a milestone achievement,” he added.
arbitration tribunal in Sweden found in 2013
The complex has the capacity to produce
Azerbaijan’s Minister of Energy Parviz that the nationalisation stood in violation 660,000 tonnes of ammonia and 577,500
Shahbazov has said the country’s oil of international law and that significant tonnes of urea.
production decreased by 8.2% in 2020 due monetary losses were suffered by the investors The product is to be exported to
to the ongoing OPEC+ (Organisation of after a "a string of measures of coordinated neighbouring countries in the region, as well
Petroleum Exporting Countries+) deal, harassment by various institutions of as to Turkey, Ukraine, and Georgia.
APA reported on January 7. Kazakhstan". The tribunal awarded $500mn The project was financed with loans from
The OPEC+ agreement was struck by to the owners of Tristan Oil, but no payment Japanese banks worth $577mn and included
countries that are members of the oil cartel and by Kazakhstan has been made to date. The a loan from the Fund for the Reconstruction
nations outside of it to reduce oil production award was upheld in 2017 as final and non- and Development of Uzbekistan at $320mn.
in the face of collapsed demand sparked by appealable. Additional cooperation was provided
the coronavirus (COVID-19) crisis. The deal The dispute has led to the freezing by a consortium of Japanese companies,
commenced in May last year with oil production of sovereign Kazakh assets worth Mitsubishi Heavy Industries and Mitsubishi
cut by 9.7mn barrels per day (b/d) by members $6.27bn worldwide, which includes the Corporation.”
excluding Iran. The Iranians were not included abovementioned attachment of $5.2bn of

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