Majors exit Kazakh offshore greenfields: what’s at stake?
Joint development of the Kalamkas More and Khazar offshore oil fields has been the key greenfield project to watch in Kazakhstan’s oil sector. The Majors’ decision to exit is driven by the US$5 billion development’s marginal economics and cost-related risks. Shell and NC KazMunaiGas, Kazakhstan’s NOC, are involved in both assets. Making the project competitive in global portfolios was always a challenge, despite sizeable cost savings from the joint development concept. The implications for the Kazakh upstream sector are many and varied. Kalamkas More-Khazar would have offered something vital for Kazakhstan: large-scale future oil production away from the country’s three megaprojects (Kashagan, Tengiz and Karachaganak). The future of Kazakhstan’s offshore also becomes much less clear. Another reality check, if one were needed, despite positive reforms in 2018 and renewed exploration.