KazMunaiGas EP to buy New Assets, invest in Output

    KazMunaiGas Exploration Production (KMG EP) plans to spend up to $2.5 billion on acquisitions and a further $2 billion to maintain its current oil output in the next two or three years, Chief Executive Askar Balzhanov said on Thursday.
    The London-listed company will spend another $1 billion on geological exploration over the same period, Balzhanov told a news conference.
    “The company currently holds $4 billion of available free funds,” he said. “The company has no debts.”
    He also noted that "the total value of potential acquisitions, the company is currently considering is about 2-2.5 billion dollars."
    Balzhanov also stated that KMG EP has established a subsidiary company for exploration called Exploration Assets LLP.
    "We have created now a separate company, 100% subsidiary of KMG EP, which will be engaged only in exploration," said Balzhanov at a meeting with investors.
    A. Balzhanov noted that the exploration company will start to actively work in January 2012 KazTAG reports.
    Balzhanov said the planned acquisitions would not include stakes in the Kashagan offshore oil deposit in the Caspian and the Karachaganak gas field.
    KMG EP’s parent company, state-owned KazMunaiGas already owns a 16.81 percent stake in the North Caspian Operating Company (NCOC), which aims to start commercial production by the end of 2012 or early 2013.
    The government of Kazakhstan, Central Asia’s largest economy and oil producer, is willing to pay up to $1.1 billion to enter another international consortium developing the Karachaganak gas field and settle a protracted ownership dispute. Kazakhstan seeks a 10-percent stake in Karachaganak.
    Both Kashagan and Karachaganak are viewed as major drivers for the future growth of Kazakh oil output. Kazakh oil output is officially forecast to rise to 132.1 million tons by 2020 from this year’s expected 80.4 million tons.
    Balzhanov said that KMG EP planned to produce more than 13 million tons annually in 2012 and 2013.
    The company said this month it expected to lose more than 1 million tons of crude output from this year’s original 13.5 million-ton forecast as a result of a protracted strike at oilfields in western Kazakhstan.
    The projected output for the next two years does not include production of the company’s would-be acquisitions, Balzhanov said, Reuters and KazTag report.