Kazakhstan: Kashagan to Renew Production in 2016

Kazakhstan appears poised to reclaim its place among the world’s leading gas and oil producers in the coming years. Kazakh Deputy Energy Minister Magzum Mirzagaliyev recently announced that Kazakhstan’s long-awaited Kashagan oil field will resume crude oil production during the second half of 2016. The supergiant (>10 billion barrels) which became operational in 2013 but was halted just weeks later due to the presence of large quantities of sour gas (hydrogen sulfide) onsite, is responsible for a reduction by nearly two billion tons in per annum oil production forecasts divulged by the Kazakh government. In addition to financial losses discernible in Kazakhstan’s GDP, large chunks of pipeline had to be replaced and new infrastructure established in order for the project to again be deemed operational. Kashagan is headed up by a coalition of mostly foreign energy companies, including Total, Exxon Mobil, royal Dutch Shell and Eni SpA.

Delays in Kashagan notwithstanding, production of Kazakh gas is expected to increase, and in order to ensure that adequate infrastructure is in place to treat this increase, Kazakhstan has announced the expansion of the Shymken oil refinery, one of Kazakhstan’s three main oil refineries. It had previously been thought that a fourth refinery would be built, but expansions are expected to allow Kazakhstan to meet its future production goals.

The expansion has been designed to increase Shymken’s processing capacity from six million tons to nine million tons, in line with Kazakh production goals. Shymken’s refinery is located near the city for which it is named in southern Kazakhstan, approximately 430 miles west of Almaty.

News Briefs: 

  • New president of Afghanistan Ashraf Ghani has welcomed the New York Times correspondent, Matthew Rosenberg, who was expelled over the summer by his predecessor, back into Afghanistan. Ghani personally called joseph Kahn, the Times’ assistant international editor, in a move that has struck onlookers as far more welcoming to Western interests. In addition to signing deals with the US and NATO to keep troop presence until after 2014.
  • A US drone strike killed five militants in the Federally Administrated Tribal Areas yesterday on the border between Afghanistan and Pakistan yesterday, reportedly killing a senior ethnic Uzbek commander. Airstrikes by unmanned US aircraft, which have become less and less common in recent months, have been more specifically targeted at militias in Waziristan. Ethnic Uzbeks and other foreign militants are a common part of the Pakistani Taliban.
  • In a surprising announcement, Berlin is considering the deployment of peacekeeping troops into Ukraine as part of a mission by the Organization for Security and Cooperation in Europe (OSCE). The source in question, who could not be named in the original article, said that no set number of troops has been cleared and there is still no clear deployment plan or operations. Talks were additionally set with Paris to discuss what support from the rest of the EU the plan would have, but emphasized that all discussions at this stage are exploratory.
  • Iran is in an ongoing bid to court foreign investors for its steel industry, which has exported 1.26 million tons since January of this year. Its government’s goal is to quadruple steel production within the decade and replace a small part of the revenue it is currently losing thanks to sanctions on its oil industry. Iranian steel mostly goes to the Middle East and North Africa, involving barter deals as a way to circumvent Western sanctions. Iran is currently losing about $4 billion a month in crude oil sales, and by contrast, sales of its steel this past July were close to $6.3 billion.
  • Turkmenistan and Uzbekistan held another round of political talks – discussing current status and prospects for the development of bilateral relations and easing tensions between the two countries. Likely one of the largest topics of discussion for them is the transportation project – the “Uzbekistan- Turkmenistan-Iran-Oman transit corridor” which was agreed upon back in 2011. The new corridor will allow passage to ports in Iran like Bandar Abbas and from there to terminals and international shipping lanes in Oman.
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