Kazakhstan state-controlled oil producer KazMunayGaz is planning major exploration investments at five large onshore blocks in the country, despite continued uncertainty over the long-term stability of exporting crude to international markets via sanctions-hit Russia.
The company’s announcement follows indications of renewed interest from domestic and some foreign investors in the hydrocarbon-rich country’s exploration scene, as Western oil majors exit and switch their focus to renewables.
KazMunayGaz has approved investments of about $64 million to collect extensive seismic data on five large blocks — Bolashak, North Ozen, Zharkyn, Mugadzhary and Berezovsky — between 2023 and 2025.
It will target areas that have seen little exploration activity in recent years at the blocks in the Mangistau, Aktyubinsk and West Kazakhstan regions.
KazMunayGaz said the seismic efforts may lead to it applying for exploration and development contracts at prospective areas.
The company hopes to be able to recoup its investments in the programme by selling stakes in prospective future projects and by marketing collected geological data.
Rights sold
After focusing on attracting large international investors into country’s upstream sector in recent years, Kazakh authorities decided to sell rights for prospective hydrocarbon acreage and existing but often idle fields to gauge the industry’s interest.
In the fourth auction since the first offering in 2021, the government has sold exploration and development rights for 32 out of 34 prospective blocks on offer, according to the country’s energy ministry.
Similar to previous auctions, domestic investors were the dominant bidders, with total payments due to the government for auctioned assets at about 44 billion tenge ($95 million) — about 23 times higher than the starting bid.
However, unlike the three previous auctions, the most recent event attracted a major foreign player, according to the ministry.
China’s Sinopec International committed to pay more than 1.3 billion tenge for the Say-Utes acreage, which covers about 2800 square kilometres in the Mangistau region, one of Kazakhstan’s oldest oil provinces.
Say-Utes hosts the Arystanovskoye field, which is being developed by a local operator, but it has been excluded from the area that would be licensed to Sinopec.
Sinopec is already a minority shareholder in Kazakhstan’s largest offshore oil and gas development, Kashagan.
The Chinese company has also, since 2014, fully owned Caspian Investment Resources, which in turn controls locally registered operators developing three onshore deposits in Mangistau, with combined production of 26,500 barrels per day last year.
Sinopec is also a 50% partner of KazMunayGaz in the Kazakhoil Aktobe venture in Mangistau, which has reported production of about 11,300 bpd and two fields under development.
