Page 14 - FSUOGM Week 10 2023

FSUOGM NEWS IN BRIEF FSUOGM

Kazakh state-run oil producer season this autumn remains uncertain. that will reach the market in four to five
The anticipated rise in LNG projects
Russia used to send some 150bn cubic
KMG hopes to increase oil metres of gas to Europe per year, but that years could lead to ruinous competition,
fell to 60 bcm in 2022 after the pipelines
which will affect the demand not only in
output by 5% in 2023 were shut down and then destroyed in the Europe but also in price-sensitive countries
such as India, Pakistan and Bangladesh.
second half of the year.
KazMunayGaz (KMG), the state-run oil The International Energy Agency (IEA) Consequently, the long-term European
and gas company of Kazakhstan, aims earlier predicted that Europe will face a export forecast has been reduced by 25%,
to raise its oil production by 5% in 2023, 40 bcm shortfall of gas and this week said from 100 bcm to 75 bcm, though it still
which would result in production of around Russia will deliver a total of 25 bcm to reflects a modest rebound in volumes from
476,000 barrels per day, Upstream Online Europe this year, mostly via Ukraine and today's levels, BCS said.
has reported. Turkey. Price adjustments are expected, with a
The company's chairman, Magzum “European gas demand likely fell 10 bcm bid drop in 2023 but an increase in the long
Mirzagaliyev, made the announcement in January and February on warmer than term. The estimated 2023 European export
during a meeting with Kazakh President typical weather, on top of the c20% apparent price is likely to drop by around $510 per
Kassym-Jomart Tokayev in Astana. fall due to conservation measures. We 1,000 cubic metres or 55% from $955 per
KMG plans to achieve the stated growth think LNG imports may retreat somewhat 1,000 cubic metres to $445 per 1,000 cubic
in production despite a reduction in as lowered prices help a rebound in Asian metres. However, the 2024 price is expected
production at its core asset, Ozen oilfield. demand, although return of the US Freeport to rise by $30 per 1,000 cubic metres, or
Kazakhstan, which is the largest oil LNG plant from a fire-induced, eight-month 10%, to $340 per 1,000 cubic metres as the
producer in Central Asia, exports around shutdown will boost supply. A warm start focus shifts to futures markets for that year.
80% of its oil output. Recently, the country to 2023 means Europe may take even less In the long term, changes in the
has been targeting a larger share of the Russian gas than we had assumed. We lower competitive landscape for LNG will result
European oil and gas market that has our Europe+Turkey export forecast by 5 bcm, in slightly higher prices in the European
become available due to the European from 65 bcm to 60 bcm,” BCS said in a note. market. Consequently, the normalised
Union's embargo on Russian oil shipments Last year Europe was able to make up the price has been raised by 10% or around
and Russia's reduced pipeline gas exports to missing Russian gas by importing a record $30 per 1,000 cubic metres, from $310 per
the continent. 180 bcm of LNG, up 63% year on year, 1,000 cubic metres to $340 per 1,000 cubic
KMG obtains most of its production taking advantage of the reduced demand metres.
from three large foreign-led projects: for LNG due to China’s economic slowdown Due to a reduction BCS forecasts
Tengiz, Kashagan and Karachaganak, in after the government put the country on a Gazprom’s dividend payments to fall by
which it holds minority non-operating COVID lockdown. The restrictions have about 60%, from RUB46/share to RUB18,
interests. since been lifted and China’s economy and the increased estimate of arbitration
The Tengiz onshore field, led by US is bouncing back which will increase its settlements from €10bn to €15bn, BCS said.
major Chevron, is planning to increase demand for gas. Historically Gazprom paid only RUB6/share
production, while operations at the The volume of the global market for before the war.
Kashagan offshore project remain steady LNG in 2023 will grow by 4.3% to a level Furthermore, the reduced long-term
after facing maintenance and unplanned of about 550 bcm, according to the latest European exports from 100 bcm to 75 bcm
technical problems in 2022. IEA estimates. Market growth in 2023, have also contributed to Gazprom’s decrease
according to IEA forecasts, will be ensured in valuation. However, the increase in the
by the continued increase in Europe's LNG long-term European gas price assumption
BCS forecasts a gas price of imports, as well as due to a "moderate has offset some of this decrease.
recovery" in demand in Asia.
$445/kcm for 2023 as demand in 2023 will also be affected by the launch Russian Urals supplies to
Growth rates of LNG imports to Europe
drops and supplies increase in the United States in Q1 2023 of the full
capacity of the large Freeport LNG LNG
European gas demand is likely to decrease plant (design capacity is 15mn tonnes per Turkey’s STAR refinery said to hit
by 10 bcm in January and February, year (tpy), or about 20.7 bcm). four-month high
owing to warmer weather than usual and Russia deliveries to non-CIS countries,
conservation measures, BCS said in a note including EU countries, in 2022 amounted Flows of Russian Urals crude oil to Turkey
on March 2. to 100 bcm, according the chairman of the reportedly hit a four-month high in
Gas price have tumbled three-fold in the board of Gazprom, Alexey Miller, speaking February after STAR refinery, owned by
last few months to $515/1,000 cubic metres at the beginning of January, 45% less than a Azerbaijan's national oil company SOCAR,
and are now below August 2021 levels. The year earlier. recommenced purchases of the blend.
average gas price in Europe in December In the long term, the volume outlook Data and four industry sources were
amounted to about $1,272 per 1,000 cubic for Europe is also downgraded for 2025, cited by Reuters on March 1 in determining
metres, in January $712, and in February said BCS. Gazprom's long-term European the supply peak was recorded.
around $583. The EU’s storage tanks were gas exports are expected to be dramatically The boosted supplies to STAR arrived
also 61% full as of March 2, a record high affected by Europe's goal of reducing as a European Union embargo on sea-
for the time of year. Russian gas imports and the extremely high borne Russian oil supplies took hold. The
However, the outlook for the new heating gas prices since late 2021. embargo, as well as a price cap of $60 per

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