KazMunaiGas Exploration Production Reports First Half 2011

KazMunaiGas Exploration Production has released its consolidated financial statements for the six months ended 30 June 2011, including production highlights.

In the first six months of 2011 KMG EP’s consolidated production was 6,311 thousand tons of crude oil (258 kbopd) including the company’s stakes in LLP Kazgermunai JV (KGM), CCEL (CCEL, Karazhanbasmunai) and PetroKazakhstan Inc. (PKI). This was 216 thousand tons or 3% less than during the same period in 2010.

Uzenmunaigas (UMG) produced 2,733 thousand tons (111 kbopd), which is 218 thousand tons less than in the same period of 2010. Embamunaigas (EMG) produced 1,382 thousand tons (56 kbopd), which is 17 thousand tons more than in the same period of last year, thereby the total volume of the oil produced at production facilities of UMG and EMG in the first six months of 2011 is 4,115 thousand tons (167 kbopd), which is 201 thousand tons, or 5%, less than in the same period of last year. The results of the first six months were negatively affected by a number of emergency power cuts in the fields, caused by severe weather conditions in March and April 2011, as well as the illegal labour action at UMG.

The illegal strike started on May 26, 2011 and by June 30, 2011 the total loss of oil production amounted to 174 thousand tons. The loss of production has mainly impacted on the company’s export volumes. The company has been taking measures to restore normal operations at UMG and to recover daily production to planned volume. A number of employees who had refused to perform their duties were made redundant and are being replaced by new employees. By the end of August the actual number of working employees approached the planned level while the decline in daily production at UMG had been reversed.

Impact on annual production of the company will depend on how quickly the company can restore production at UMG to planned level. The expected underproduction compared to the plan for the full year of 2011 is currently estimated at 800 thousand tons, or 6% of the consolidated volume of KMG EP's production (including the stakes in the jointly controlled entities where production targets are expected to be exceeded).

The company’s export sales and domestic sales volumes from the Uzenmunaigas and Embamunaigas production facilities were 3,293 thousand tons (134 kbopd) and 872 thousand tons (35 kbopd), respectively.

The company’s share in the production volumes from KGM, CCEL, PKI and NBK amounted to 2,196 thousand tons of crude oil (91 kbopd), which is 15 thousand tons or 1% less than in the same period in 2010.

The company’s share in the sales volumes from KGM, CCEL and PKI was 2,440 thousand tons of crude oil (101 kbopd), including 1,989 thousand tons (82 kbopd) or 82% supplied to export markets.