Forecast for Kazakhstan's oil output remains affirmative - Fitch Solutions

Economy Materials 12 September 2022 15:23 (UTC +04:00)
Forecast for Kazakhstan's oil output remains affirmative - Fitch Solutions
Maryana Ahmadova
Maryana Ahmadova
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BAKU, Azerbaijan, September 12. Forecast for Kazakhstan’s oil output remains positive, Trend reports via Fitch Solutions.

According to the forecast, the total volume of liquid hydrocarbon production will grow by 5.1 percent year-on-year in 2022 and by 4.3 percent - in 2023.

However, as the agency noted, additional investment will be required to sustain positive growth in the long term.

As the data shows, Kazakhstan’s oil production over the first five months grown by 5.5 percent year-on-year, while natural gas liquids - by 1.2 percent.

“Production has fluctuated in the year-to-date, from a high of 1.98 million barrels per day in January to a low of 1.76 million barrels per day in April. Our rest-of-year forecast is relatively conservative, allowing for continued, sporadic outages. Over the medium term, growth will be supported by the completion of the integrated Future Growth Project – Wellhead Pressure Management Project (FGP – WPMP) at Tengiz. FGP – WPMP is being developed by Tengizchevroil (TCO), in which oil major Chevron holds a 50% stake. The project will reinject associated sour gas production to support reservoir pressure and raise output. It will increase production by approximately 260,000 barrels per day, with the WPMP project start-up delayed from late 2022 to mid-2023 and the FGP project delayed from mid-2023 to late 2023 or mid-2024, following Covid-19-related delays,” Fitch Solutions noted.

During the projected period, Fitch Solutions now expects the overall growth of liquid hydrocarbon production to decline from an average of 3.1 percent year on year in 2022-2026 to -1.6 percent in 2027-2031, based on the existing design pipeline and the baseline rate of decline on inherited production assets. Additional capital commitments will be needed to reverse the expected decline in long-term growth.

Meanwhile, Kazakhstan has held talks with Azerbaijan on oil export through the Baku-Tbilisi-Ceyhan pipeline to Turkey, which is expected to launch in September 2022. However, the planned volumes of 30,000 barrels per day are minimal, the report said.

At the same time, an additional 75,000 barrels per day could be sent from Kazakhstan through Azerbaijan to the Black Sea port of Supsa in Georgia or via rail, “with the country having already ramped up its crude-by-rail shipments in the year-to-date,” Fitch Solutions noted.


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