Kazakhstan wants more oil output to stay at home to tackle fuel problems

Equus Mining

04/02/2022 12:50

By Alla Afanasyeva and Olga Yagova
    MOSCOW, Feb 4 (Reuters) - Kazakhstan has asked the foreign
companies operating its main oilfields to supply the domestic
market so it can boost its refining industry and tackle the
rising fuel prices that led to violent protests in January.
    Energy minister Bolat Akchkulakov said Kazakhstan can't ramp
up domestic refining without supplies from the foreign-led
consortia operating its Tengiz, Kashagan and Karachaganak
oilfields, according to notes accompanying a presentation he
gave to journalists. 
    The fields currently export all of their output.        
    A source close to one of the consortia said the energy
ministry was seeking supplies in the next two to three years,
but was sceptical the operators would respond favourably. 
    "We look into it, but I doubt it can be profitable," he
said, adding export prices are currently two or three times
higher than domestic ones. 
    Kazakhstan was rocked by a rare flare-up of protests in
January that were initially triggered by fuel shortages and
rising prices. Although the government quelled the unrest, it is
looking for ways to prevent a recurrence.  urn:newsml:reuters.com:*:nL8N2TL39F
    As part of its plan, the energy ministry is proposing to
double capacity at its Shymkent refinery, which can currently
process around 120,000 barrels of oil per day (bpd).
    "It is not possible to do this without supply from Tengiz,
Kashagan and Karachaganak," the presentation notes said.
    The notes said the ministry saw the need to increase
domestic oil prices to attract the foreign operators. But it was
not clear how this could be achieved.
    Tengiz is operated by Chevron-led  CVX.N  Tengizchevroil,
while Kashagan's operator is the internationally-owned North
Caspian Oil Consortium (NCOC). Karachaganak is operated by
Karachaganak Petroleum Operating (KPO), which is led by Eni
 ENI.MI  and Shell  SHEL.L .
    Chevron said it did not comment on commercial matters. NCOC
and KPO didn't immediately respond to the requests for comment.
    Tengiz, Kashagan and Karachaganak account for about 63% of
Kazakhstan's oil output, but under the terms of their production
sharing agreements the operators are able to export all of the
output. 

 (Reporting by Alla Afanasyeva and Olga Yagova in MOSCOW
Editing by Mark Potter)
 ((Olga.Yagova@thomsonreuters.com;))