Kazakhstan's KMG reports slight output drop following civil unrest

Kazakhstan's Kazmunaigaz said Jan. 11 that it has seen a slight decrease in oil production, in an update on the impact of recent civil unrest in Kazakhstan on the company's operations.

Protests broke out in the oil-rich Central Asian region in early January, sparked by increases in LPG prices. Unrest caused some disruption to energy companies' operations, as well as the government's resignation, and the introduction of a state of emergency in some parts of the country.

"There are shutdowns of some separate drilling wells at production facilities and a slight decrease in oil production, which does not significantly affect the overall results of KMG," the company said in a statement.

KMG said that overall most of its oil and gas production, shipments, oil refining and gas processing continue as normal.

"KMG is undertaking all necessary measures to ensure stable operations of the group's refineries and production facilities in order to support the stability of the country's energy complex," KMG said.

It added that it will include disclosures on the impact of the unrest in early January in regular financial, operational and other reports. It said that currently it is meeting all obligations to third parties.

KMG's subsidiary Ozenmunaigaz operates in the Mangystau region – one area that saw a state of emergency introduced last week. In the first nine months of 2021 Ozenmunaigaz accounted for around 25% of KMG's oil production of 15.92 million mt.

Separately Russia's Lukoil said Jan. 11 that its production assets in Kazakhstan are operating normally. Lukoil holds stakes in development projects including Zhenis, Al-Farabi, Khvalynskoye, Tsentralnoye, Tengiz and Karachaganak, as well as Caspian Pipeline Consortium.

Operations were disrupted at Kazakhstan's main crude production project Tengiz. Other key projects including the Kashagan and Karachaganak fields and the CPC pipeline have not reported disruptions.

Prior to the recent protests, Kazakhstan was producing above its OPEC+ crude production quota.

S&P Global Platts estimated Kazakhstan's December output at 1.68 million b/d, against a quota of 1.556 million b/d.

On Jan. 10 the CPC pipeline operator said December loadings were at the highest level in 2021, averaging 1.59 mil b/d.

Overall 2021 shipments were up almost 3% year on year, averaging around 1.3 million b/d. Shipments increased in 2021 in line with a demand recovery linked to successful coronavirus vaccine rollouts and reduced lockdowns.

Shipments via the route from Kazakhstan in 2021 accounted for 87%, with the remaining 13% provided by Russian producers.

Prices for CPC crude rose last week as the protests escalated. Platts assessed CPC Blend FOB Aframax at $76.58/b Dec. 31. This rose to $81.65 on Jan. 6, and was $80.57/b on Jan. 10.