Azerbaijan, Baku, Sept. 13 /Trend/
The production of the first oil from the Kashagan field this week is positive for Kazakhstan and KazMunaiGas, the report of the Fitch Ratings agency said on Friday.
"The onset of production is one reason we expect Kazakhstan's economic growth rate to recover after a slight slowdown in 2012. Meanwhile, KazMunaiGas expects the Kashagan field to make a material contribution to its EBITDA and cash flow from next year," the report said.
Fitch had anticipated production at Kashagan starting this month. The full impact will depend on how quickly production ramps up after this week's initial output.
Kazakh officials have stated that it would take between three weeks and one month to launch commercial output from the field. Eni, lead member of North Caspian Operating Company, which is developing Kashagan, said on Wednesday that in the initial 2013-2014 phase, output will grow to 180,000 barrels per day, compared with current output from Kazakh oil fields of 1.6 million barrels per day.
The report said that the impact of Kashagan is already incorporated in agency's Kazakhstan real GDP growth forecasts of 5.3 percent for 2013 and 6.0 percent for 2014, up from 5.0 percent last year. Higher commodity exports support Fitch's expectation that Kazakhstan's economy will grow more quickly than the 'BBB' category median over the medium term.
"Increased oil exports from Kashagan will also support Kazakhstan's current account surplus, which had been stagnating thanks to lower oil prices. However, foreign direct investment may decline as the first round of capital investment into the field slows," the agency's experts said.
Kashagan has estimated reserves of 35 billion barrels of oil, of which 11 billion barrels are considered as recoverable. Plans to increase production to 370,000 barrels of oil equivalent per day will depend on current or future developers' appetite for the significant additional costs involved in the second phase of the project. Phase 1 suffered several delays and cost around $46 billion. Kazakh officials estimate that if Phase 2 is completed total domestic production may increase to about 2.2 million barrels of oil equivalent per day in 2018.
Fitch also views the launch as positive for KazMunaiGas, which has a 16.8 percent stake in the project. KazMunaiGas expects to use Kashagan's contribution to EBITDA and cash flows to repay about $2.6 billion in project-related debt.
"Kashagan, along with its Karachaganak project, are important for KazMunaiGas as production from its majority-owned exploration and production subsidiary is on a steady decline," the report said.
Besides, China National Petroleum Company became a shareholder in Kashagan with an 8.3 percent stake on 7 September 2013. This should help Kazakhstan over time increase its oil supplies to China, which are currently constrained by pipeline capacity.
The existing capacity of the Kazakhstan-China pipeline is 14 million tons per annum, and exports to China reached 10 million ton per annum in 2012, or 12 percent of output.
KazTransOil, Kazakhstan's national oil pipeline operator said earlier this year that Kazakhstan will boost oil exports to China by 20 percent to 12 million ton per annum (or 240,000 barrels of oil equivalent per day) in 2013 and it hopes to further increase capacity to 20 million tons per annum, or by over 40 percent.
Fitch rates Kazakhstan 'BBB+' and KazMunaiGas 'BBB'. The Outlook on both ratings is Stable.
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