KMG Q1 Profits Plunge on Low Oil Prices
The net income of Kazakhstan's KazMunayGas (KMG) sank by 77.5% yr/yr in the first quarter, landing at tenge 70bn ($177mn), according to company results published on June 3.
The national oil producer blamed the slump on low oil prices and asset impairments – factors that were partially offset by lower costs, some tax reductions and a foreign exchange gain from the tenge's weakening against the US dollar.
Revenues were down 22% at tenge 1.38 trillion, in line with a 19.7% decline in the price of Brent oil, while KMG's net debts ballooned 17.3% to tenge 2.77 trillion. The company produced 5.93mn mt of oil in the three-month period, virtually the same amount as in the first quarter of 2019, but its gas production, including volumes that were flared or re-injected, grew 4% to 2.26bn m3.
KMG noted that its gas export revenues increased by 15.3% to tenge 206bn in the first quarter, on the back of higher volumes. This was despite China declaring a force majeure on Kazakh shipments in early March, because of the impact on consumption from the coronavirus (Covid-19) crisis. Revenues from crude oil and oil products sales were down 44.1% to tenge 236bn and 30.5% to tenge 267bn respectively.
Kazakhstan is required to cut its oil output by 23%, or 390,000 b/d in May and June under a deal with other Opec+ members, from a baseline output in October 2018. It lowered its production of oil and gas condensate by 10% month on month to 1.69mn b/d in May and failed to fully meet its obligations, Reuters sources claimed on June 3. Condensate is not subject to the Opec+ agreement.