PetroKazakhstan is ready to build up its resource base


PetroKazakhstan Kumkol Resources is an upstream business unit of the Kazakhstan-Chinese company – PetroKazakhstan and is one of the biggest producers of Kumkol oil. The Vice-President for Strategic Communications, Bakhytzhan Issengaliyev, shared information about the company short-term plans in his interview for Argus.

-What are the company plans for this year?

– PetroKazakhstan Kumkol Resources planned its oil production for this year at the level of 3.1 million tons. The company is developing 6 fields, including the south-east part of Kumkol field, Kumkol South, Kyzylkiya, Aryskum, Maibulak and North Nuraly fields.

We are still somewhat behind the production schedule, since last winter the company was facing interruptions in power supply to the fields. Currently we are eliminating these lags and we are confident that we will reach the planned volume.

– What are the company short-term goals?

– At this point adjustments to the budget and the work program for the next year and the following 5 years are being finalized. In the next 2 years we are planning to achieve a production level of 3.2 million tons per year (see the table) by opening new fields. We invest about 50 million USD in exploration and it pays off. 14 wells out of 19 wells drilled in 2008 were successful.

The fact that oil production is being carried out not from a single field, but from a number of fields and that more than 350 wells are being run influences the efficiency of the company business. The raw material is of good quality, but the water content in produced oil is high. Besides, we are facing a step-by-step depletion of reserves; therefore our primary objective continues to be expansion of the resource base by exploration and commissioning of new fields. Some part of the new fields is located in Kyzylorda Oblast of Kazakhstan, where the Kumkol group of fields is located too, and the other part of new sites is located in Karaganda Oblast. As of January 1, 2009 the total oil reserves of PetroKazakhstan Kumkol Resources made up 93.3 million tons.

– How soon will you start to operate new sites?

– The procedure for obtaining licenses for new fields and extending the existing licenses takes time. Besides, in the next three years a significant part of our resources and efforts will be engaged in a large-scale project for revamp of the Shymkent Refinery owned by the company.

– Can you provide more details on the refinery revamp?

– At this point we refine 4.1 million tons per year at our refinery, while the objective is to achieve an annual processing of 6 million tons by 2014. Moreover, the products will have to comply with Euro-3 standard and the light product yield shall reach 90%. The refinery revamp is our key financial objective. We are busy making key decisions with regard to this project. It is important to note that during the revamp the refinery will be running as usual without reducing its refining volumes.

– Can you say that the cooperation between the company shareholders – CNPC and KazMunaiGaz – is going successfully?

– Surely, it is successful. During the International Forum that took place in late September of this year in Beijing, I used operations of PetroKazakhstan company in my report as an example of efficient cooperation of two national oil and gas companies of Kazakhstan and China. Chinese investors contributed new technologies to the project for Kumkol group development and demonstrated a serious approach to business and an increase of business efficiency. Over the past few years PetroKazakhstan has become one of the ten largest oil producers in Kazakhstan and is one of the main tax payers in the country. Moreover, at this point the share of foreign personnel in 3,400 employees of the company is only 2%.

– How serious is the expansion of Chinese oil companies to the Kazakhstan market?

– According to official information among 92 oil and gas companies of Kazakhstan there are 56 companies with participation of foreign investors, 20 of which involve Chinese investors, and their share in the overall country production exceeds 20 percent. Over time this indicator may be reduced when they start to produce oil at Kashagan.

– Last week some information appeared regarding purchasing of a large share in Exploration and Production KazMunaiGaz company by Chinese investors.

-11% of depositary receipts are something to think about. We are dealing with outcomes of the global market which uses financial instruments requiring deliberate and well thought-out decisions.

Oil production by PetroKazakhstan Kumkol Resources:  

Year Volume (mil. t) Incl. production from new fields (K t) 
2008 3.20 – 
2009 3.10 – 
2010 3.00 250 
2011 3.20 480 
2012 3.16 570 

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