Page 12 - FSUOGM Week 35 2020

FSUOGM INVESTMENT FSUOGM

Russian-Uzbek JV to oversee MTO project

UZBEKISTAN A Russian-Uzbek joint venture is taking charge partners including IHS Markit, Nexant and
of a 500,000 tonne per year methanol-to-olefins Amec Foster Wheeler have conducted market-
A chemical complex (MTO) project in Uzbekistan. ing analysis and feasibility studies.
of this size has no Jizzakh Petroleum, a partnership between The selection of a technology licensor is
comparison in the CIS Uzbekistan’s national oil company Uzbekneft- currently underway, and after that front-end
region, according to egaz and Gas Project Development Central Asia, engineering design (FEED) work can begin.
Jizzakh Petroleum. an affiliate of Russia’s Gazprom, is now a major The plants’ end-product olefins derivatives are
investor in the plan, in line with a decision by expected to include low-density polyethylene
Uzbekistan’s cabinet of ministers. (LDPE), ethylene-vinyl acetate (EVA), polyeth-
“A chemical complex of such a scale and tech- ylene terephthalate (PET), polypropylene (PP).
nical capabilities has no comparison in the CIS The project’s estimated cost is $2.8bn.
region,” Jizzakh Petroleum said in a statement, Uzbekistan has some 1.2 trillion cubic metres
noting the plant would be built in the Bukhara in proven reserves, according to BP, but it has
region and run on 1.5bn cubic metres per year of been unable to capitalise fully on this wealth
natural gas feedstock. It will enable Uzbekistan to because of a lack of export markets. The only
convert its gas into export-oriented high-value outside customers for its gas are Russia, which
products. has much larger reserves of its own, and China,
Its completion will also help Uzbekistan which uses its many import options as leverage
diversify its economy, develop textile, chemical to bargain down prices.
and parapharmaceutical industries and reduce Uzbekistan’s strategy is therefore to convert as
imports, Jizzakh said. much gas as it can domestically into higher-value
“We aspire to create a world-class chemical products that can be exported to markets further
company making great products for society, and afield, while also curb reliance on imports in key
this project is fully aligned with our vision,” it industry sectors. Another project it is advancing
said. is a gas-to-liquids (GTL) plant, which will turn
Preparatory work on the project has been gas into motor fuels for domestic use. Its launch
completed, and consulting and technical is expected in early 2021. ™

PERFORMANCE

KMG earnings halve in H1

KAZAKHSTAN CORE earnings at Kazakhstan’s national oil A 6.7% weakening of the Kazakh tenge against
company (NOC) KazMunayGas (KMG) almost the US dollar helped cushion the blow of low oil
The weaker halved in the second quarter as weak prices and prices on its revenues. But it also led to the compa-
performance was the OPEC+ restrictions took their toll on revenues. ny’s net debt increasing by 10% to KZT2.59 trillion
result of lower prices KMG’s EBITDA was at KZT552bn ($1.36bn) as foreign-denominated loans were revalued.
and OPEC+ cuts. for the six months, down 46.6% year on year, KMG also booked $557mn in impairment
while net profit shrank to just KZT21bn, com- charges at its assets during the first half, includ-
pared with KZT622bn a year earlier. ing a $393mn charge at its Romania-based sub-
The average for dated Brent oil was $40.07 sidiary KMG International. It also took on a
per barrel during the period, KMG said, ver- $149mn charge at its Embamunaigas upstream
sus $65.95 in the first half of 2019. Oil prices unit in Kazakhstan.
went into free fall in April, as the coronavirus KMG is Kazakhstan’s biggest oil producer,
(COVID-19) pandemic triggered a collapse in but the bulk of its output comes from the Tengiz,
global fuel demand. Kashagan and Karachaganak oilfields, where it is
KMG also produced 3.1% less oil and gas partnered with international oil companies (IOCs).
condensate in the six months, or 11.345mn On a national level, Kazakhstan expects oil
tonnes (457,000 barrels per day (bpd)). Kazakh- output to decline by 5.8% in 2020 to 85.2mn
stan began imposing record cuts to production tonnes (1.71mn bpd) because of OPEC+ cuts,
in May under a deal with other OPEC+ produc- following several years of growth.
ers aimed at rebalancing the market. The goal for 2021 is 86mn tonnes, Kazakh
Oil runs at KMG’s refineries in Kazakhstan Economy Minister Ruslan Dalenov said on
and Romania were down 17.1% at 8.29mn August 24 while presenting the country’s draft
tonnes (334,000 bpd). And the company also 2021-2023 budget plan. Output is seen rising to
saw weaker gas sales to China. 89.6mn tonnes in 2022 and 100.8mn tonnes in
Overall, KMG's revenues were down 33.8% 2023. A lot will depend on OPEC+ policy. The oil
at KZT2.25 trillion, while its free cash flow cartel’s current plan is to bring back production
(FCF) was negative KZT5bn, from a positive in phases, ending cuts completely at the end of
KZT141bn a year earlier. April 2022. ™

P12 www. NEWSBASE .com Week 35 02•September•2020