Kazakhstan’s state-run oil and gas holding company KazMunayGaz has warned minority investors of a possible further slide in its operating and financial performance in the remainder of 2023 after presenting lacklustre results for the first half of the year.
In a presentation to the Astana-based Kazakh stock exchange, KazMunayGaz said it anticipates negative impacts from regular power cuts at its operated assets that could be amplified by a decline in international oil prices.
Three major wholly owned oil-producing KazMunayGaz subsidiaries are located in Mangistau province, which was hit hard in during the first half of the year by accidents at a Soviet-era power station in the Kazakh city of Aktau.
Commenting on a recent blackout in Mangistau that also partially affected the neighbouring Atyrau region, KazMunayGaz acknowledged it has had to deal with regular power interruptions in Mangistau in the past several years, with authorities turning a blind eye to the Aktau power plant’s decay.
KazMunayGaz said its revenues dropped by 15% to just over 3.9 trillion tenge ($8.5 billion) in the first half of this year against the same period of 2022. Net profit declined steeper, by 37% to 492 billion tenge, according to the company.
With its surplus cash-generating capacity deteriorating in the reporting period because of lower commodity prices, KazMunayGaz said it recorded an almost 8% jump in net debt, to $5 billion, from the end of 2022.
Most of the outstanding debt is in long-term corporate bonds held by institutional investors that have to be redeemed in several instalments between 2027 and 2048.
Capital investments rose by 57% to $667 million in the reporting period, another factor contributing to the larger net debt, the company said.
Segment breakdown
KazMunayGaz reported a 25% decline in earnings before interest, taxes, depreciation and amortisation (Ebitda) to $1.76 billion for its upstream division.
The second-largest business segment, oil pipeline transportation, posted a 5% drop in Ebitda to $258 million in the first half of the year against the same period in 2022.
This has happened despite a double-digit increase in domestic and export oil pipeline tariffs by KazMunayGaz transmission subsidiary Kaztransoil, which also saw a marginal increase in overall shipped oil volumes in the reporting period.
KazMunayGaz’ Caspian Pipeline Consortium, meanwhile, grew overall transportation volumes by 6% in the first half of this year compared with 2022.
The consortium operates a 1500-kilometre oil pipeline from the Atyrau region to a marine terminal near the Russian Black Sea port of Novorossiysk.
Although oil tanker departures in the port of Novorossiysk were suspended for several hours recently after Ukrainian sea drones attacked Russian military vessels in the area, Caspian Pipeline Consortium said it continued oil loadings without interruption.
* This story has been amended to reflect a Caspian Pipeline’s statement.
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