Kazakhstan's energy ministry talks possible changes regarding oil extraction

Oil&Gas Materials 18 March 2020 18:43 (UTC +04:00)
Kazakhstan's energy ministry talks possible changes regarding oil extraction

BAKU, Azerbaijan, March 18

By Nargiz Sadikhova - Trend:

Kazakhstan is not expecting strong pressure on oil extraction volume at the country's oil and gas projects, Kazakhstan’s Vice Minister Asset Magauov said, Trend reports.

Magauov made the statement commenting the question whether current oil prices will affect oil extraction volume in Kazakhstan at a press conference held in Nur-Sultan on March 18, 2020.

“We conducted a preliminary analysis of the impact of different price scenarios on the level of oil production in Kazakhstan. Overall, expenditures of various companies vary greatly, depending on the stage of the field development. Major projects require costs of $10 per one barrel of oil, older fields that have been under development for a long time, require up to $30-$35 per barrel. We don’t think that the current price range will be a strong pressure on the level of production at our oil and gas projects,” he said.

He added that more detailed analysis is being conducted by the ministry now which also includes $20-25 per barrel price scenario.

“The results of the analysis will be available soon,” he said.

On the morning of March 9, 2020, Brent crude plunged 25 percent dropping to its lowest since February 2016 and recording the biggest one-day percentage declines since Jan. 17, 1991.

Trading volumes in the front-month hit record highs in the previous session after a three-year pact between Saudi Arabia and Russia and other major oil producers to limit supply fell apart on March 6, 2020.

At the end of 2018, OPEC and a number of non-affiliated countries (Kazakhstan being one of them) decided to extend the agreement on reducing oil production, which has been in force since the beginning of 2017. The countries agreed to reduce their production by a total of 1.2 million barrels per day from the level of October 2018.

Thus, latest liabilities of Kazakhstan within the agreement were 1.843 million barrels a day.