Majors exit Kazakh offshore greenfields: what’s at stake?

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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.

Table of contents

  • Kalamkas More-Khazar – a thwarted greenfield development
    • For Kazakhstan’s liquids outlook, this jeopardises the single largest source of upside
    • For Kazakhstan’s offshore industry, growth beyond Kashagan is in doubt
    • Standalone economics are a stretch too far
    • The wait to mature large offshore finds continues
    • Kashagan’s satellites risk being stranded
    • For Kazakhstan’s competitiveness, this is another reality check despite 2018 reforms
    • Cost synergies could not go far enough
    • Kazakh major capital projects face a cost-of-supply challenge
  • What does the future hold?

Tables and charts

This report includes 6 images and tables including:

  • Kalamkas More-Khazar summary
  • Kalamkas More-Khazar economics: benchmarking on PSC and Alternative Subsoil Tax terms
  • Kazakhstan oil and condensate production
  • Commercialisation of offshore discoveries made in 2000s
  • Majors’ growth projects* IRR and spend
  • Global liquids cost curve in 2030

What's included

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  • Document

    Majors exit Kazakh offshore greenfields: what’s at stake?

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