Page 15 - FSUOGM Week 20

FSUOGM PIPELINES & TRANSPORT FSUOGM
Kazakh oil exports to China rise fourfold in May
KAZAKHSTAN
KAZAKHSTAN is to increase its oil exports to neighbouring China almost fourfold this month, Kazakhstan’ Deputy Energy Minister Aset Magauov told local press on May 18.
“According to our forecasts, the volume of Kazakhstani oil export to China will increase from 50,000 tonnes (12,200 bpd) in April to 230,000 tonnes (54,000 bpd) in May of this year,” Magauov told a press briefing.
He explained that the export of Kazakh oil in the European direction had become less attrac- tive due to lower prices, while the proposed price from China was higher, adding: “There- fore, requests from oil companies for the supply of their oil for export to China have increased dramatically.”
Kazakhstan ships oil to China via the Atasu- Alashankou and Kenkiyak-Kunkoil pipelines,
which together are able to carry up to 400,000 barrels per day of supplies. Shipments have seen a sharp decline in recent years, from almost 240,000 bpd in 2012 to less than 26,000 bpd in 2018.
Shipments slumped earlier this year after supplies in January were found to be contami- nated with organic chlorides –chemicals used in oil extraction that can cause damage to refining equipment if left in the oil. Supplies were also affected by weaker demand in China during the height of the country's lockdown.
The Kazakh government promised last year to reverse the trend of decline in Chinese oil sales, to reduce dependence on European buyers. It set a target of increasing deliveries to 120,000- 140,000 bpd within a few years by reversing the flow of a key pipeline in Western Kazakhstan.™
PERFORMANCE
Nostrum sees earnings plunge further in Q1
KAZAKHSTAN
Nostrum has been struggling with output decline for years.
KAZAKHSTAN-FOCUSED oil producer Nos- trum Oil & Gas posted a further slump in core earnings in the first quarter, against a backdrop of low prices and output decline.
The London-listed firm’s earnings before interest, tax, depreciation and amortisa- tion (EBITDA) plunged 46% year on year to $31.7mn in the three-month period, from $58.7mn a year earlier. Revenues were down 37% at $60.4mn, as production dropped 26% to just above 24,000 barrels of oil equivalent per day (boepd).
Nostrum was also stung by the collapse in global oil prices in March triggered by the coro- navirus (COVID-19) crisis.
“With the status of the COVID-19 pan- demic evolving rapidly, it has provided a highly dynamic and challenging scenario for global marketsoverthefirstquarterof2020,”CEOKaat Van Hecke said in a statement on May 19.
Nostrum has been grappling with falling pro- duction levels at the Chinarevskoye oilfield in western Kazakhstan for years, as a result of oper- ational setbacks and low oil prices. It had earlier strived to produce as much as 100,000 boepd of oil and gas by 2020.
The company had aimed to reach this goal by adding a third gas treatment unit (GTU) at Chinarevskoye, but the facility’s launch was repeatedly delayed. It was finally declared ready
to operate last year, but difficulties with well pro- ductivity mean it remains unutilised.
“In line with our strategy to commercialise our world-class infrastructure we are continu- ing our discussions with third parties to secure additional [gas] to fill the spare capacity at our gas treatment facility,” Van Hecke continued.
Nostrum suffered a setback in March when fellow Kazakh producer Ural Oil & Gas delayed the deliveries of gas which it had agreed to pro- cess at its Chinarevskoye facility.
Nostrum said it had halted all drilling in 2020 and would operate with one workover rig at the field. It was saddled with $1.05bn in net debt at the end of March, compared with a market capi- talisation of only $19.3mn as of May 19.™
Week 20 20•May•2020 w w w . N E W S B A S E . c o m P15