3 Dec 2015 15:58

KMG EP expects oil production from its main assets to go up 1% in 2016, 4% in 2020

ASTANA. Dec 3 (Interfax-Kazakhstan) - KazMunaiGas Exploration Production (KMG EP) plans an increase in oil production from its main assets by 1% in 2016, the Kazakh oil company said.

"Planned production in 2016 is expected to be 5.612 million tonnes from JCS OzenMunaiGas (OMG) and 2.822 million tonnes from JSC EmbaMunaiGas (EMG). Thus, the total planned production volume in 2016 from OMG and EMG is expected to be 8.434 million tonnes or 1% more than planned production in 2015 due to improving the efficiency of geological and technical measures," the company said in a press release.

The company's share in the planned production of Kazgermunai (KGM), CCEL and PetroKazakhstan Inc. (PKI) in 2016 is expected to be 3.777 million tonnes or 5% less than expected production in 2015 due to a natural decline of production at PKI.

The Company expects that by 2020 the annual volume of oil production at OMG and EMG will be 4% higher than planned production in 2015 including a 7% increase to 5.9 million tonnes at OMG. Meanwhile, production of KGM, CCEL and PKI will decrease by 17% by 2020 compared to the planned production in 2015 due to a decline of production at PKI and KGM by 37% and 13% respectively. Thus, the total combined production of the Company, including its stakes in KGM, CCEL and PKI, in 2020 is expected to be 3% lower than planned production in 2015.

The Company expects that in 2016 OMG and EMG will supply 2.38 million tonnes to the domestic market, or 28% of OMG and EMG's total sales. It is expected that domestic market supplies in 2015 will be 2.68 million tonnes which is 340,000 tonnes more than the approved budget. In 2016, OMG will supply 1.9 million tonnes to the Atyrau refinery and EMG will supply 480,000 tonnes to the Pavlodar refinery.

It is expected that in 2016-2020 the domestic supply volume will gradually increase up to approximately 45% of OMG and EMG's total sales. The Company expects that in 2016 and onwards there will be no deliveries to Russia as well as to the Atyrau refinery for the company's own use.

The price for domestic supply in 2016 in the budget is set at 17,100 tenge per tonne ($7.9 per barrel) at the Atyrau refinery and 28,802 tenge per tonne ($13.3 per barrel) at the Pavlodar refinery. Prices for domestic supply have yet to be approved by independent directors.

It is expected that the company's share in the volume of oil supply to the domestic market in 2016 from KGM, CCEL and PKI will amount to 1.9 million tones or roughly 50% of total sales from these companies. In 2017-2020 the volume of oil supply to the domestic market from KGM, CCEL and PKI is expected to remain at 50% of total sales from these companies. KGM will supply oil to the Pavlodar refinery in 2016 and to the Shymkent refinery starting from 2017, PKI to the Shymkent refinery and CCEL to the Aktau bitumen plant. The average domestic supply price in 2016 is expected to be 28,802 tenge per tonne ($12.5 per barrel) for KGM, 38,075 tenge per tonne ($16.5 per barrel) for PKI and 18,870 tenge per tonne ($9.4 per barrel) for CCEL.

In Q4 2015, supplies to the Atyrau refinery are paid at 16,600 tenge per tonne. Supplies to Pavlodar refeniriy are paid at 21,100, 35,400 and 35,900 tenge per tonne in October, November and December, respectively.

Taking into account the expected in Q4 2015 volume of oil supplies from OMG and EMG, the domestic supplies in 2015 will amount to 2.68 million tonnes, which is 340,000 tonnes more than the 2.34 million tonnes announced by the company earlier.

KMG EP is among the top three Kazakh oil producers. The overall production in 2014 was 12.3 million tonnes of oil, including the Company's share in Kazgermunai, CCEL and PKI. The company's shares are listed on the Kazakhstan Stock Exchange and the GDRs are listed on The London Stock Exchange.