Kazakhstan’s KazMunayGaz has reported a continuing decline in output at its three key wholly owned oil-producing subsidiaries, suggesting that recovery is still far away despite the growth in international energy prices.

The state-run oil and gas holding company said its largest oil-producing unit, Ozenmunaygaz, cut output by more than 4% in the first half of this year, to about 106,000 barrels per day, compared with the same period in 2020.

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Two other units — Mangistaumunaygaz and Embamunaygaz — reduced production by more than 5% and 10% respectively.

All three subsidiaries operate mostly legacy depleted oilfields in the north-west and west of Kazakhstan, where hundreds of low flow rate wells were idled last year following the Covid-19-related decline in demand.

Earlier, KazMunayGaz acknowledged that Ozenmunaygaz’s oil production costs were running high, at the equivalent of $29 per barrel.

It has also revealed declines of between 4% and 9% in production at the country’s three main foreign-led developments — Tengiz, Karachaganak and Kashagan — in the first half. KazMunayGaz is a minority shareholder in these projects.

However, output at this trio of assets is expected to spring back after completion of major upgrading and construction by the international shareholders over the next two to five years.

According to KazMunayGaz, its total oil production fell by more than 5% to 434,000 bpd between January and June compared with last year, with gas output declining by almost 6% to 4 billion cubic metres.

The worsening operating results present a challenge to the authorities in Kazakhstan, which have long planned to sell some of the company’s shares to international investors via an initial public offering.

KazMunayGaz, which also controls networks of oil and gas trunklines in Kazakhstan, said it witnessed growth in transit shipments of natural gas from Turkmenistan to China and Russia across Kazakhstan. Some improvements were seen in the oil refining and marketing segments.

Because of declines on other transmission routes, the overall transported volume of gas rose by just 3% to 46.4 Bcm between January and June, while shipments via the network of KazMunaygaz’s oil trunklines decreased.