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NC KazMunaiGas financial strength tested by Karachaganak pre-emption


NC KazMunaiGas financial strength tested by Karachaganak pre-emption

Report summary

The oil price fall has forced NC KazMunaiGas (NC KMG), Kazakhstan’s state-owned oil and gas operator, to take responsive measures to keep its stretched finances under control.

If Shell’s acquisition of BG closes, NC KMG would be able to exercise its pre-emptive right to purchase part, or all, of BG’s 29.25% stake in Karachaganak, Kazakhstan’s key gas project. However, recent developments cast doubt over its ability to do so.

We do not expect full pre-emption of BG’s stake. Yet, this could still be an opportune time for NC KMG to cement its position in one of Kazakhstan's three megaprojects - particularly given its minor current stake (10%). Partial pre-emption could prove strategically and commercially compelling, with Karachaganak set to provide value and volume growth from the 2020s.

Given Shell’s US$30 billion disposal target, partial pre-emption at Karachaganak could be a mutually beneficial outcome for Shell/BG and the Kazakh State.

What's included?

This report includes 2 file(s)

  • NC KazMunaiGas financial strength tested by Karachaganak pre-emption PDF - 368.00 KB 7 Pages, 0 Tables, 5 Figures
  • NC KazMunaiGas financial strength tested by Karachaganak pre-emption.xls XLS - 203.00 KB

Description

This Upstream Oil and Gas Insight report highlights the key issues surrounding this topic, and draws out the key implications for those involved.

This report helps participants, suppliers and advisors understand trends, risks and issues within the upstream oil and gas industry. It gives you an expert point of view to support informed decision making.

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  • Executive Summary
  • Rising debt and strategic investments stretch NC KMG’s finances
    • Kazakh State seeks to adapt NC KMG to low oil price
    • Decision time approaches for NC KMG at Karachaganak
    • Kazakh State and the megaprojects – a turbulent last decade
  • Karachaganak – the third of Kazakhstan’s ‘crown jewels’
    • Karachaganak expansion – gas remains a stumbling block...
    • … but incremental investment phase offers attractive project economics
  • Pre-emption decision will shape multiple portfolios
    • Appendix

In this report there are 5 tables or charts, including:

  • Executive Summary
  • Rising debt and strategic investments stretch NC KMG’s finances
    • NC KazMunaiGas: capital expenditure and cash flow outlook (2015-20)
    • NC KazMunaiGas: evolving participation in megaprojects
  • Karachaganak – the third of Kazakhstan’s ‘crown jewels’
    • KEP - incremental gas sales may exceed GSA
    • Comparative economics of KEP concepts*
  • Pre-emption decision will shape multiple portfolios
    • Karachaganak: key facts
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