Page 11 - FSUOGM Week 35 2021

FSUOGM PERFORMANCE FSUOGM

KMG profits surge in H1

on higher oil prices

KAZAKHSTAN NET profits at Kazakh state oil company company’s gas output fell 5.6% to 4.08bn cubic
KazMunayGas (KMG) surged in the first half of metres, owing to a drop in sales domestically and
KMG suffered decline the year to KZT644bn ($1.5bn), up from a mere to China.
in its oil and gas KZT21bn in the same period in 2020, on the The company’s largest production unit,
production, however. back of higher oil prices. Ozenmunaygaz, reined in supply by more than
KMG’s EBITDA nearly doubled in the six- 4% to around 106,000 bpd, while Mangistaumu-
month period to KZT1.06 trillion, while rev- naigaz and Embamunaygas similarly reported
enues grew by 38.5% to KZT3.12 trillion. Free declines of over 5% and 10% respectively. All
cash flow (FCF) bounced back to KZT291bn, three run mostly mature fields reaching deple-
versus negative KZT5bn a year earlier, while the tion in western Kazakhstan, where hundreds of
company’s net debt dropped 8.8% to KZT2.37 wells were turned off last year in response to the
trillion at the end of June. price collapse and Kazakhstan’s OPEC+ com-
KMG noted that Dated Brent crude on aver- mitments. Production costs at these fields are
age sold for $65 per barrel in the first half of this relatively high, with the cost at Ozenmunaygaz
year, compared with $40 a year earlier. The com- estimated at $29 per barrel in the first half.
pany also benefitted from a 5% devaluation of KMG also reported declines of between 4%
the Kazakh tenge. and 9% at the country’s three largest oil devel-
On the downside, KMG registered a 5.3% opments – Karachaganak, Kashagan and Kara-
decline in oil production to 10.74mn tonnes chaganak. After reporting several years of output
(435,000 barrels per day), with the decline spread growth on the back of Kashagan’s launch in 2016,
across its three main oil-producing subsidiaries Kazakhstan was forced to make unprecedented
and the consortia that are developing Kazakh- cuts to supply last year as part of a co-ordinated
stan’s biggest oilfields. The key factor was OPEC+ effort by OPEC+ members to rebalance the mar-
cuts that came into force in May last year. The ket. ™

PROJECTS & COMPANIES

Rosneft ramps up drilling to

stem Bashneft decline

RUSSIA ROSNEFT has launched tenders for drilling in of 2021, down 34% year on year.
the hope of arresting a sharp decline in output Bashneft was once part of private conglom-
Bashneft, bought by at its Bashneft subsidiary in the Urals region of erate Sistema but was nationalised in 2014 after
Rosneft in 2016, has Bashkiria. a Moscow court ruled that its original privati-
seen a dramatic decline Rosneft is prepared to pay nearly $30mn to sation in the early 2000s had been conducted
in production in recent contractors to sink 22 exploration wells between illegally. Before its takeover by Rosneft, Bashneft
years. 2022 and 2024, tender documents showed. The had been aspiring to increase its output by 13%
wells are to be situated in four key producing annually, by employing high-tech oilfield recov-
areas in Bashkiria and are divided into several ery solutions introduced when it was under Sis-
lots. tema’s rule.
Seven will be drilled at the Arlanskoye field, The sharp fall in Bashneft’s production has
Bashneft’s largest asset, which has been in pro- also hit the company’s finances. It halted tax
duction for 60 years. They will have depths rang- payments and dividend payouts last year after
ing from 1,200 to 2,200 metres. reporting a net loss. Authorities in Bashkiria,
Rosneft bought a controlling 50% interest in which hold a 25% interest in the producer, had
Bashneft in 2016 for $5.3bn during a so-called received assurances that dividends would remain
privatisation sale. The company produced stable when the company was renationalised.
352,000 barrels per day of oil in 2019, according According to the notice, drilling contractors
to energy ministry data, but it bore the brunt of have until September 9 to submit their proposals
Rosneft’s OPEC+ cuts last year. As a result, its in Rosneft’s tender. And the contest results will
output came to only 210,000 bpd in the first half be announced in November. ™

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