Kazakhstan's Oil Output Takes a Hit: What's Next for Tengiz?
Fire Leads to Production Shutdown
Kazakhstan's Tengiz oilfield, a major player in global oil production, is facing a significant setback. A recent fire at the GTES-4 power station caused a power supply issue, leading to a temporary shutdown of both the Tengiz and Korolevskoye fields.
This halt in production is expected to last another week to ten days, impacting crude oil exports through the Caspian Pipeline Consortium (CPC).
Impact on Exports
- Five export shipments have already been cancelled.
- Total loss: Between 600,000 and 700,000 metric tons of CPC Blend crude, scheduled for January and February.
- Chevron, the largest stakeholder in Tengizchevroil (TCO), confirmed the precautionary shutdown but remained tight-lipped about operational details and financial implications.
Compensation from Other Fields
Despite the drop in Tengiz's output, Kazakhstan's overall oil production hasn't taken a major hit yet. Other fields like Kashagan and Karachaganak have ramped up production to compensate:
- Kashagan's output increased by 28%.
- Karachaganak saw a 21% rise in production over the first 19 days of January compared to the first 12 days.
However, this might not be enough to offset the Tengiz shutdown completely.
Redirection of Crude Oil
The Caspian Pipeline Consortium (CPC) is expected to reduce its throughput soon. Kazakhstan mainly exports its oil via CPC, but due to recent infrastructure damage at the marine terminal in Yuzhnaya Ozereyevka, some crude is being redirected:
- Baku-Tbilisi-Ceyhan (BTC) pipeline.
- Germany via the Druzhba pipeline.
Joint Venture Stakeholders
The Tengiz oilfield is a joint venture involving several major companies:
- Chevron: 50%
- ExxonMobil: 25%
- KazMunayGas: 20%
- Lukoil: 5%
The shutdown highlights the vulnerability of relying on a few major fields for oil production and the importance of diversifying energy sources.
