Insight
NC KazMunaiGas financial strength tested by Karachaganak pre-emption
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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.
Table of contents
- 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
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Karachaganak – the third of Kazakhstan’s ‘crown jewels’
- Karachaganak expansion – gas remains a stumbling block...
- but incremental investment phase offers attractive project economics
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Pre-emption decision will shape multiple portfolios
- Appendix
Tables and charts
This report includes 5 images and tables including:
- NC KazMunaiGas: capital expenditure and cash flow outlook (2015-20)
- NC KazMunaiGas: evolving participation in megaprojects
- KEP - incremental gas sales may exceed GSA
- Comparative economics of KEP concepts*
- Karachaganak: key facts
What's included
This report contains:
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