Western-led gas and condensate producer Karachaganak has reported another hiccup in hydrocarbons output for Kazakhstan as the operator deals with gas processing and shipping capacity restrictions while also working to mitigate ongoing depletion of its underground reservoirs.
Operator Karachaganak Petroleum Operating said the venture produced nearly 129 million barrels of oil equivalent in 2022, against 134 million boe in 2021.
Production capacity has been partially constrained since November by a long-running maintenance at a Russian facility across the Kazakh-Russian border.
Known as the Orenburg gas processing plant, the facility is linked to Karachaganak by a dedicated pipeline built back in the Soviet days.
The Orenburg plant, which is owned and operated by Russian state-controlled gas giant Gazprom, remains a key facility for Karachaganak to process and ship gas in compliance with market specifications.
The maintenance issues at Orenburg were announced after Kazakh gas pipeline operator Qazaqgaz signed an agreement with Gazprom in June 2022 promising to increase the volume of Karachaganak gas processed at the Orenburg plant to over 9.33 billion cubic metres in 2023 from 8.1 Bcm that was planned for 2022.
According to Kazakh news outlet NewsHub, the maintenance works at Orenburg have been recently extended but should end by March.
Karachaganak Petroleum Operating — whose partners include Eni, Shell, Chevron, Russia’s Lukoil and Kazakh state-controlled oil and gas holding KazMunayGaz — had not replied to a request from Upstream to confirm the Orenburg gas processing restrictions by the publishing time.
Uncertainty about the Orenburg plant, coupled with expanding international sanctions against Russia and the Kremlin’s desire to retaliate against the west, have reportedly prompted Karachaganak partners to start considering options to finally build their own gas processing facilities after 25 years of operations.
KazMunayGaz said earlier that Karachaganak partners are working “on preliminary feasibility studies to estimate volumes of raw gas supplies and places where they may be processed”, according to NewsHub. The results of these studies are expected before the end of this year, KazMunayGaz added.
Kazakh Energy Minister Bolat Akchulakov said in January that Karachaganak partners have been given an option to arrange sending raw gas to an already existing processing plant about 80 kilometres from the field.
The facility is operated by Zhaikmunay, which is a Kazakh subsidiary of UK-listed minnow Nostrum Oil & Gas.
Nostrum said earlier that following completed upgrades in 2019, three trains of the plant are capable of processing over 4 Bcm of raw gas per year, with significant spare capacity for third parties, as Zhaikmunay’s own asset — the Chinaryovskoye field — is still in the early phase of development.
Another proposal calls for the design and construction of an own dedicated gas processing facility for Karachaganak with an annual throughput capacity of 4.5 Bcm of gas per year at estimated investments of between $3 billion and $3.5 billion, according to reports in Astana.
Authorities in Astana are also understood to be interested in having more gas processed in the country to help meet growing domestic demand.
With the depletion of the Karachaganak field, the volume of raw gas is set to rise in several years as the operator completes ongoing and planned upgrades to increase the production of condensates.
Caspian Pipeline risks
Karachaganak condensate is already being shipped to international markets via Caspian Pipeline Consortium’s export trunkline, running from Kazakhstan across Russia and ending with offshore tanker loading facilities near the Black Sea port of Novorossiysk.
Last year, Karachaganak delivered about 76 million barrels of its condensate via Caspian Pipeline against 119 million barrels that the venture was able to supply to global markets in 2021 via this route.
The network reported a set of outages last year that slowed down or interrupted oil loading operations in the Black Sea.
Although the Caspian Pipeline has been excluded from the scope of international sanctions against Russia, suggestions the Kremlin may retaliate against the pipeline led to ratings downgrades for Kazhakstan and its largest producer, Chevron-led Tengizchevroil, last year.
US major ExxonMobil, which owns a 25% stake in Tengizchevroil, reminded investors of potential risks to Tengiz oil production in a US securities filing earlier last week.
ExxonMobil “could experience a loss of cash flows of uncertain duration from its operations in Kazakhstan”, the filing said if Tengiz oil exports through the Caspian Pipeline are “disrupted, curtailed, [or] temporarily suspended”.