17 Nov 2023 18:46

Karachaganak gas to be excluded from Kazakhstan's LPG export ban

ASTANA. Nov 17 (Interfax) - Kazakhstan's Energy Ministry has proposed amendments to the recent order that imposed a six-month ban on the export of liquefied petroleum gas, propane and butane by road and rail.

This order, effective since November 14, restricts the export of these products "except for exports by subsoil users operating under production sharing agreements (contracts) or subsoil use contracts.

The amendments to the order have been published in the Open Online Legal Database for public discussion until November 30.

According to the amendments, the ban should not apply to "goods that were produced (processed) from Kazakh feedstock extracted at the Karachaganak field in accordance with the international agreements of the Republic of Kazakhstan". In addition, the ban should not apply to "transit goods whose origin and final destination are outside the Republic of Kazakhstan."

The Energy Ministry had previously introduced state regulation of retail prices for liquefied petroleum gas, leading to increased domestic usage. While the domestic market demand ranges from 130,000 to 140,000 tonnes per month, the ministry supplies 120,000 to 130,000 tonnes, covering 90% of the demand. During refineries repairs, demand can rise beyond supply by 15-25%.

Kazakhstan has maintained the ban on liquefied petroleum gas export by road since 2017 to prevent the illegal export of affordable fuel intended for the domestic market. This ban was extended for three years in 2020.

The Karachaganak oil and gas condensate field is one of the largest in the world. Its reserves are estimated at 1.2 billion tonnes of oil and 1.35 trillion cubic meters of gas. It is operated by Karachaganak Petroleum Operating B.V., which is comprised of Shell (SPB: RDS.A) that owns a 29.25% holding in KPO through its 100% affiliate company BG Karachaganak Ltd, Eni (29.25%), Chevron (18%), Lukoil (13.5%) and KazMunayGas (10%). Karachaganak Petroleum Operating has been developing the Karachaganak field since 1997 on the basis of a 40-year production sharing agreement.