Bloomberg News

BG's Group Raises Output in Kazakhstan After Field Maintenance

November 16, 2005

BG Group Plc (BG/), a U.K.-based natural- gas producer, and its partners resumed near normal production after a five-month maintenance program that lowered output at their field in Kazakhstan.

Karachaganak Petroleum Operating BV, operated by BG, exports most of its crude through a pipeline to the Black Sea operated by Chevron Corp. (CVX:US) Some gas condensate, a high-quality blend of oil, is also being shipped to OAO Gazprom's OOO Orenburggazprom refinery in Russia.

``Scheduled maintenance went largely as planned and we have seen record production levels in the past couple of weeks,'' Petrina Fahey, a BG spokeswoman, said in an e-mailed note. ``Some additional work was required, which has marginally impacted liquids'' pumped to the Orenburg refinery.

The Organization of Petroleum Exporting Countries today said it had lowered its fourth-quarter estimate for Kazakhstan's oil production by 56,000 barrels a day because of gas flaring restrictions, technical faults and maintenance at Karachaganak.

The field's production has dropped 47 percent in four months, to 131,000 barrels a day in September, according to OPEC. ``We remain in doubt as to how soon production can be restored to capacity and what needs to happen, and therefore have taken a conservative view for this field for the rest of the year,'' the group said.

No Estimate

BG doesn't release monthly production estimates, Fahey said. Karachaganak averages a combined 450,000 barrels a day of oil and gas, Larry Andersen, BG's president in Kazakhstan, said in June.

Of that, 7 million tons a year of crude (140,000 barrels a day) are exported through Chevron's pipeline. About 4 million tons of gas condensate and 8 billion cubic meters of gas a year are shipped to the Orenburg refinery. Another 7 billion cubic meters of gas are re-injected into the field to push out crude.

Karachaganak Petroleum plan to invest $400 million to $500 million to expand its refinery for gas condensate in Kazakhstan so it can export more oil to western markets.

The company plans to process 3 million to 3.5 million tons of condensate a year in Kazakhstan, Andersen said. The project may take as much as four years.

To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net

To contact the editor for this story: Tim Coulter at tcoulter@bloomberg.net


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