ALMATY
(THE GLOBE)
We start this chronicle from those events, with which the chronicle of summer 1998 ended. That chronicle was published in the issue of �The Energy of Kazakhstan� in October 1998. Of course, we cannot consider the dynamics of the development of the Kazakhstan oil industry separately from events in the world and in the Caspian region. Nevertheless, even such a short list gives some facts for meditation. On one hand, there is an obvious stagnation of the business activity (drilling of new wells, putting into exploitation of new oil objects, etc.). On the other hand, there is hopeful progress in some key projects, such as KTC, Karachaganak, etc. It also seems that the National Companies �KazakhOil� and �KazTransOil� are getting more experienced and are working more effectively.
The whole period of our chronicle might be characterized by a term �expectation�. World oil markets after dramatic price fall have started to recover. Slowly, but surely. Expectations were taking place inside Kazakhstan as well. Many actors on oil market of Kazakhstan were waiting the results of drilling on Kashagan. It is the last big project in Kazakhstan. �Big � means in this case something which is relevant to compare with Tengiz . If it will fail�. No need to have good imagination to invent a negative scenario: investors will loose their interest to Kazakhstan ( too much real politics, too little real money). Kazakhstan will need money to explore new oil fields (sometimes expenses to explore are more substantial than expenses for operation), Kazakhstan budget will be tighten even more and all economy should be reoriented from its current oil trend. As for budget holes, Kazakhstan according to New York Times is going to sell almost fifty percent of its share in Tengiz project.
1998
September 14, Astana
An Agreement to sell Kazakhstan�s share in the Consortium prospecting oil in the Caspian shelf is signed in Astana. More than US$ 500 million is received for the one-seventh share which is divided equally between �Phillips Petroleum� (USA) and �IMPEX� (Japan). Both foreign participants also undertake additional responsibilities. �Phillips� agrees to analyse the possibilities of utilising barren gas at different deposits in Kazakhstan�s zone of the Caspian shelf, while �IMPEX� agrees to contribute US$ 50 million to finance prospecting work in the transitional zone of the Caspian shelf and in the Aral Sea. The transaction is the biggest once single sale in the entire Caspian shelf. According to analysts, this deal was very profitable for Kazakhstan.
October 2, Astana
The �Atlantic Caspian Resources� company announces that �BN-Munai� Ltd. received a licence to research the deposit known as the Akkul oil and gas zone. The company owns 5% of the shares of �BN-Munai�. According to �Atlantic Caspian Resources�, the Akkul deposit contains gigantic hydrocarbon resources. Reports that �BN-Munai� is the first official winner of the tender announced by the State Committee on Investments in June 1998 are confirmed.
October 6, Almaty
�Alsueiket Group� company (Saudi Arabia) won the contract on modernisation and widening of oil pipelines network transporting Kazakhstan oil.
October 6, Almaty
Fill Mik, Head of �Chevron Munaigas�, a subsidiary of �Chevron� corporation in Kazakhstan, which takes part in the project on oil transportation from Kazakhstan to the Mediterranean Sea via the Bosporus, in response to the intention of Turkey to reduce number of tankers in the strait, announced that oil transportation was safe.
October 9, Almaty
The Kazakhstan Minister of Foreign Affairs Kasymzhomart Tokaev announced the sale of a part of Kazakhstan�s Share Capital in some companies in order to replenish the state treasury if in the next year the oil prices will continue to fall.
October 13, Almaty
On November 11 �Hurricane Hydrocarbons Ltd.� announced that the agreement had been concluded with the representatives of �Shymkentnefteorgsyntez�. This agreement will give �Hurricane� a possibility to process oil directly at the oil-processing plant and to transport processed products to their customers.
October 14, Almaty
Victor Fedotov, general Director of KTC emphasised that at the international conference KIOGE�98 each spoken representative of companies, which were shareholders of KTC, had expressed their support of KTC�s project. According to Mr. Fedotov, the current fall of oil prices will not touch KTC at all, as �the construction of the pipeline does not depend on financial condition of either Kazakhstan or Russia, as the pipeline is being financed by western companies.�
October 27, Washington
On December 8 to 9, high-rank officials, manufacturers and experts on the Caspian Sea will hold a meeting in Washington to discuss technical decisions and problems regarding further development of Caspian energy.
November 4, Almaty
The President of the JSC �Hurricane Kumkol Munai� Keith Mc-Kre announced the intention of the Canadian company �Hurricane Hydrocarbons Ltd.� to start searching of strategic partners in order to attract investments after its operations in Kazakhstan failed. �Hurricane� is suffering from financial problems due to worsened interrelations with Shymkent oil-purifying plant.
The total oil resources of �Hurricane� in Kazakhstan are evaluated as 429 million barrels.
November 4, Moscow
The Oil Minister of Kuwait the sheikh Saud al-Sabakh threatened to �fill the world�s markets with oil to punish exporters who do not observe undertaken responsibilities regarding reduction of their sales volumes.� It is obvious that Russia is among �guilty� countries, as despite its agreements with OPEC Russia increased oil sales by 6%.
December 11, Astana
The Minister of Energy, Industry and Trade Mukhtar Ablyazov announced that Kazakhstan was conduction negotiations with Georgia and Azerbaijan to increase oil export via Caucuses to the terminals in the Black Sea.
December 14, Washington
At the Washington conference, organized by Cambridge Energy Research Associates and U.S. � Russia Business Council, there was a growing consensus.
December 25, Washington
The advisor of the US Trade Ministry Yan Kalitsky, speaking on December 9 at one of the conferences devoted to the Caspian oil, described 1998 as �a year when euphoric race to the Caspian Sea was restrained by rational expectances.�
1999
February 25, Moscow
The Agreement signed at the governments� level was officially supplemented in Moscow on December 23, 1998. Quotes for export of Kazakhstan oil via Russia are to be increased from 3.5 million tons in 1998 to 9 million tons in 1999 (including to CIS countries).
March 1, Astana
The Main Agreement on geological and geophysical researches has been signed. �KazakhOil� company is the owner of the license and executor of the works. According to the agreement achieved while Kazakhstan was transferring its share in the Caspian consortium to the Japan company �IMPEX�, the project will be financed in the amount of US$ 50 million by the Japan National Oil Company.
March 22, Almaty
Testing of the evaluating Saigak-2 well drilled by �Shell� company (the second partner is Feba Oil) in the Temir block (Aktyubinsk region) is completed. The well produced 400 tons of oil/day. Despite the good results, it is doubtful whether the deposit�s reserves are sufficient for commercial exploitation.
April 16, New York
�American International Petroleum Corp.� announces the Kazakh government�s decision to entitle the company to utilise the whole �Shagyrly-Shomyshty� gas deposit. This deposit has proven gas reserves of 1.14 trillion cubic metres. The decision was taken according to the results of the tender announced in July 1998. The company already has a licence to prospect a nearby block.
May 4, New York
The US government forbids �Mobil� from exchanging oil with Iran. This decision has a direct impact upon all of Kazakhstan�s projects in which �Mobil� is participating.
May 5, Almaty
The first well was drilled in the prospecting site Kondybai. The license for prospecting in the territory of the former polygon Taisoigan was granted to �Embamunaigas� company, which was included in the NOC �KazakhOil�.
May 12, Moscow
The construction of the terminal of the KTC pipeline has been started in Novorossiisk. Oil will be directly exported from Kazakhstan deposits through this terminal.
May 16, Almaty
The Baha-1 well in Temir block of �Shell� company is liquidated because of poor results.
May 21, Almaty
�Hurricane Kumkol� and ShNOS (�Shymkentnefteorgsyntez�) announced their expected merge. Though details of the agreement are still confidential, �Kazcommertsbank� may become the most important participant of the agreement. In the result, �Kazcommertsbank� may control both enterprises.
May 25, Atyrau
�KazakhOil� purchased 45% share in the Atyrau OPP from the trading company �Telf� registered in Switzerland. Thus, �KazakhOil� increased its share in this enterprise up to 86% and now controls this OPP.
May 26, Almaty
�KazakhOil� announced the merge of its two main mining companies (�Embamunaigas� and �Tengizmunaigas�). The new enterprise will be called the JSC �KazakhOil-Emba�. The administration of the enterprise will be in Atyrau.
June 2, Moscow
�KazakhOil� managed to persist on increase of quotes, which had been previously agreed at the meeting of the President of �KazakhOil� Kapparov, and the Russian Minister of Fuel and Energy Kalyuzhin held in Moscow.
June 8, Almaty
�British Gas� and �Agip�, the main participants in the Karachaganak project become involved in a dispute with the government over 5 billion tenge in tax debts. However, the deputy Prime Minister Kasymzhomart Tokaev announces that Kazakhstan would not apply to International Arbitrage for help. This problem could be settled by negotiations.
June 17, Almaty
Represented by the Agency on Investments and National Companies �KazakhOil� and �KazTransOil�, Kazakhstan signs an agreement with the companies of the Karachaganak Consortium (British Gas, Agip, Texaco and Lukoil) to construct 460 km of oil pipeline Karachaganak-Atyrau-KTC. Other elements concerning the Karachaganak project are also included in the agreement. The corresponding changes are supplementations to the Agreement on Output Division concluded in November 1997.
June 20, Almaty
In Burlin steppe, 30 km from the town of Aksai in Western Kazakhstan, the first stage of construction of the Karachaganak Processing Complex has been started.
June 24, Atyrau
The joint meeting of shareholders of the JSC �KazakhOil-Emba�, the new enterprise, which had been formed in the result of the merge of �Tengizmunaigas� and �Embamunaigas�, was held in Atyrau. Bori Cherdybaev was elected the vice-President of the NOC �KazakhOil�, the former President of �Embamunaigas� Makhambet Batyrbaev was elected the chairman of the Board and the president.
July 1, Aktobe
�KazTransOil� increases tariffs for oil transportation through its pipelines to US$ 9/ton/1000 km in the Western system (Aktau-Atyrau-Samara) and to US$ 9.6/ton/1000 km in the Western system (Pavlodar, Kumkol, and Shymkent). No changes are done on the Aktyubinsk-Orsk system. Simultaneously, floating coefficients are introduced to recalculate dollar equivalent of tariffs nominated in tenge. So, for exporters the coefficient is 120 tenge/US$ 1, while for companies supplying oil to the internal market, it is just 87.5 tenge/US$ 1. Such a strange scheme allows the authorities to avoid formally introducing an export duty, that might be interpreted as a new tax and hence create juridical problems.
July 7, Tulsa, Oklahoma
The Sunkar drilling device of the OKIOC consortium leaves Astrakhan and is taken to the drilling site in the Eastern Kashagan structure. Spending more than US$ 100 million to reconstruct the device, the OKIOC receives a unique 85 x 53 m device with weight of 7600 tons. This device is intended to work in the special climate and geological conditions of the north-east Caspian Sea.
July 10, Peking
During the visit of a Kazakhstan Government delegation to China, the Chinese National Oil Company (CNPC) announces the results of the Technical-Economic Feasibility of the construction of the oil pipeline from Western Kazakhstan to China. The scheme is officially acknowledged as uneconomic. At the same time, both parties express their support of the Southern variant to Iran. The CNPC is going to take an active part in this project both through oil-substitution schemes and the construction of a Kazakhstan-Turkmenistan-Iran oil pipeline.
July 19, Almaty
The Parliament has ratified the changes of the conditions of the loan in the amount of US$ 109 million by the World Bank. This loan is intended for the rehabilitation of Uzen deposit. The agreement signed in Washington on June 16 reregistered the credit to the NOC �KazakhOil�, and simultaneously provides a strict control for financial condition of the company by external creditors.
July 20, Almaty
�TEPKO� announced the beginning of drilling of its first prospecting well in Temir-B block. �Central Yakut-1� well is located approximately 280 km southwards from Aktobe and 60 km from Zhanazhol deposit. The projected depth of the well is 3495 m, the purpose horizon is Sredny Carbon. �TEPKO� is the joint venture of the Turkish company TPOS and Amoko Kazakhstan (which is included in BP-Amoko group).
July 21, Aktau
In Aktau more than 200 workers of the JSC �KarazhanbasMunai� held a meeting and tried to enter the office of the Canadian company �Nation Energy� (the former �Triton-Vuko�) demanding to pay due salary unpaid from 1997. The Canadian company owns approximately 95% of shares of �KarazhanbasMunai�, according to the results of the privatisation 1997.
July 27, Astana
The Ministry of Energy, Industry and Trade introduces tariffs for oil processing services to stop the uncontrolled increase of the prices of petrol and other oil processing products. There is an immediate reaction by representatives of some of Kazakhstan�s OPP � that the decision is illegal and will not be observed.
August 4, Ashgabad
The negotiations between Kazakhstan and Turkmenistan regarding transportation of Kazakhstan oil from the deposit Kumkol via Turkmenistan to the port Turkmenbashi (former Krasnovodsk) have been started. The Kazakhstan party confirmed that it was required to change the present tariff.
August 6, Astana
For the time being Kazakhstan will not sell its 25% share in the JV �Tengizchevroil�, the Minister of Energy, Industry and Trade Mukhtar Ablyazov announced at the plenary meeting of the Senate of the republic.
August 19, New York
Kazakhstan has agreed to sell on a London-based auction nearly half its share of the Tengiz oilfield. Government estimates it between $1.2 billion and $1.6 billion
August 11, Astana
In Astana the new law on oil was approved in the variant proposed by the NOC �KazakhOil.� The bill stipulated proposals on the status of the national company and that 100% of the property is to belong to the state.
The law emphasises that the national oil company is to monitor the operations of foreign oil companies working in Kazakhstan and observance of the republican laws and conditions of contracts.
August 17, New York
�American International Petroleum Corp.� announced about the notification of the Agency of RK on investments reharding the approval of the operational contract for exploitation of the gas deposit �Shagarly-Shamyshty�. The gas reserves at this deposit of 174 000 acres come to 700 billion cubic pounds.
The deposit with a non deep Eocene zone is 1300 to 1500 pounds.
August 23, Almaty
By the 100th anniversary of the Kazakhstan oil the mini serials �On our own land � from century to century!� has been completed.
Creators affirm that they did not shoot a separate �oil story�, but touched the country�s history and the history of the population.
August 23, London
The government of Kazakhstan announced about the intention to sell a part of its share, which came to 25% of the Tengiz oilfield (which is one of the biggest one in the world).
10% of stock have been proposed for sale. The results of the London auction are not popularised.
August 23, Almaty
According to the decree of the government of the Republic of Kazakhstan the President of NOC �KazakhOil� Nurlan Kapparov was dismissed for exceeding his authority while settling strategic issues of the oil and gas industry of Kazakhstan.
The vice-president Uzakbai Karabalin was appointed the acting President of the national oil company.
August 30, Calgary
�Hurricane Hydrocarbons Ltd.� actually postponed the negotiations on the merge with the Kazakhstan oil-refinery plant (Shymkent Oil-Processing Plant, SOPP).
Richard Noris, the chief finance manager of �Hurricane� announced that the merge was not a critical point for the reformation efforts by �Hurricane�.
According to Mr. Noris, the proportion of cost of stocks of �Hurricane� and SOPP will change (before these companies had 51% and 49% respectively).
September 3, Atyrau
The Prime Minister of Kazakhstan Nurlan Balgimbaev announced that Atyrau would be the third (oil) capital of the republic.
According to the PM, by 2010 it is planned to increase the annual oil production.
At the present time local and foreign companies working in the Atyrau region produce about 50% of the total Kazakhstan oil.
September 15, Sophia
The Presidents of Kazakhstan and Bulgaria discussed supply of the Caspian oil via Caucasus and the Black Sea to Europe.
The President of Kazakhstan Nursultan Nazarbaev announced that he was interested in seeking possibilities to supply the Caspian oil via Caucasus and the Black Sea to the Bulgarian ports Varna and Burgas, and further to Europe.
The Caspian oil will be supplied through oil pipelines along to the Transeka-transport corridor Europe-Caucasus-Asia, which is the project supported by EC.
October 1, Astana
According to Nurlan Balgimbaev�s request, the President of Kazakhstan Nursultan Nazarbaev dismissed him from the post of the Prime Minister of Kazakhstan. Nurlan Balgimbaev was appointed the President of NOC �KazakhOil�. The Minister of Foreign Affairs K. Tokaev was appointed the acting Prime Minister.
October 5, Almaty
The fifth Kazakhstan internatioinal exhibition KIOGE�99 was opened in Almaty.
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