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Kazakhstani CPC crude loadings surge to record high in March

April 06/2020

MOSCOW (MRC) -- Loadings of Kazakhstan's CPC crude grade spiked to a record-high 1.65 million b/d in March propelled by production from the giant Tengiz and Kashagan fields, reported S&P Global with reference to the pipeline's operator's statement.

Now  CPC is a light crude that loads in the Russian port of Novorossiisk on the Black Sea, however, 90% of the crude comes by pipeline from landlocked Kazakhstan's oil fields in and around the Caspian Sea.

Loadings in March were 150,000 b/d higher than the previous record set in June last year, on a barrels-per-day basis, according to the statement late-Wednesday from the Caspian Pipeline Consortium.

The surge means Kazakhstan has been contributing to massive oversupply in global markets, which has been reflected in particularly steep discounting for the grade.

CPC is typically shipped to customers in Asia and is viewed as having similar refining characteristics to Saudi Arabia's Arab Extra Light. Saudi Aramco has priced that grade at a discount of $8.10/b to ICE Brent in April.

The jump in loadings implies big increases in production from Kazakhstan's two largest fields: Tengiz and Kashagan. The two fields accounted for 723,000 b/d and 471,000 b/d of the March loadings according to the statement, although this does not necessarily correspond to wellhead production, and overall CPC loadings in February were a tepid 1.33 million b/d.

Tengiz, which is operated by a Chevron-led consortium, remains Kazakhstan's pre-eminent crude oil source. The field currently has a nameplate capacity of 600,000 b/d, but produced nearly 650,000 b/d last year, and is undergoing a major expansion project that should lift output to 900,000 b/d in around 2023.

Kashagan, operated by a seven-company international consortium, also appears to be performing strongly, despite periodic reports of glitches. The field came on stream in 2016 after major issues involving leaking pipelines and cost overruns.

In a statement this week, Richard Howe, managing director of North Caspian Operating Company, which runs Kashagan, said production was running as normal and "overall production reliability remains high."

As regards COVID-19, he said NCOC was well prepared and taking preventive measures, no cases of infection had been recorded, and there were no plans to lay off staff in response to low oil prices.

"In general, Kashagan will have a production life of decades. It should be viewed from a long-term perspective rather than in the context of the shorter-term economic climate," Howe said.

As MRC informed before, in January 2020, Kazakhstan suspended its oil exports to China after organic chlorides contamination was found in crude supplied by a Kazakh producer less than a year after the "dirty oil" crisis in neighboring Russia.

We also remind that South Korea's LG Chem said in January 2016, it had decided to drop a plan to jointly build a USD4.2-billion petrochemical complex in Kazakhstan, citing a prolonged slump in oil prices and a sharp increase in facility investments. In 2011, the chemical company said it would construct the complex near the western Kazakh city of Atyrau as part of a 50-50 joint venture with two Kazakh companies. The plan involved building ethylene and polyethylene plants with annual capacities of 840,000 tonnes and 800,000 tonnes, respectively. The project was announced in 2013.

Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, homopolymer PP, propylene, LDPE, HDPE, ethylene, petrochemistry, LG Chem, Kazakhstan, Russia.
Category:General News
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