Shell aims to build on its upstream presence in Kazakhstan with potential new exploration activity given its Kazakh assets are operating to "world class" standard, upstream director Zoe Yujnovich told an industry event in Astana Oct. 4.
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Speaking at Kazakhstan Energy Week, Yujnovich voiced satisfaction with the two upstream production assets the company has stakes in, the giant Kashagan and Karachaganak fields. The two fields' combined output accounts for around half of Kazakhstan's flagship 1.5 million b/d exports of CPC Blend crude.
The comments came despite Shell dropping its involvement in the Kalamkas-Khazar project, seen as a potential offshoot of the Kashagan project, in 2019, while there has also been wrangling over cost recovery for the Kashagan project involving arbitration proceedings in Europe.
In addition, there have been concerns over the risk to exports stemming from hostilities between Russia and Ukraine in the Black Sea. However, Kashagan is now thought to be producing around 420,000 b/d, with a strong operational record this year after glitches in 2022, according to industry sources.
"What is always incredibly powerful is leveraging the existing relationships that we have, such as Karachaganak and Kashagan... and I wouldn't underestimate that our ability to work together in partnerships to create world-class assets is an incredibly strong foundational support that gives us confidence for further investment," Yujnovich said.
"It's pleasing to see the journey of how the assets and ventures here are indeed performing to that world-class level... One thing that we find when we're in strong ventures: it enables us to then continue the dialogue around other areas of mutual interest that can continue to drive support to the country," she said.
"Discussions around how we can extend the existing footprint that we have -- we have a number of Memoranda of Understanding that we're looking to develop around exploration and further opportunities -- is certainly something that we're always willing to engage in," she said.
CPC Blend has become a major oil supply source for Europe in the wake of sanctions on Russian crudes such as Urals, with the Kazakh grade trading at prices close to the Platts Dated Brent benchmark. Platts assessed CPC Blend at a $1.60/b discount to Dated Brent Oct. 3, according to S&P Global Commodity Insights data.
Speaking at the same event, the CEO of state-owned KazMunaiGaz, Magzum Mirzagaliyev said his company was about to launch a "roadshow" promoting onshore exploration opportunities with potentially "very significant" reserves. He also noted work underway on an agreement with Lukoil to develop the Kalamkas-Khazar assets dropped by Shell. "There is a strong potential for this kind of exploration works," he said.