IN THE NEWS / Kazakh Woes Force Hurricane Hydrocarbons <HHLa.TO> Oil Output Cut
ALMATY, Oct 30 - Canadian oil company Hurricane Hydrocarbons Ltd said on Friday it has been forced to cut oil production at its Kumkol deposits in Kazakhstan because of a breakdown in relations with the Chimkent oil refinery.
Keith McCrae, president of Hurricane Kumkol Munai OJSC, Hurricane's Kazakh arm, said output from joint venture partners had fallen to around 7,000 tonnes per day from 9,500 tonnes.
"We were producing approximately 9,500 tonnes of oil, and this went down to 7,000 tonnes under the restricted mode," he told a news briefing in Kazakhstan's commercial capital. "That restriction came at the end of June."
Output from the joint venture partners is currently only 2,000 tonnes per day, but that was due to scheduled refinery maintainance at the Chimkent plant, he added.
Hurricane has accused the Chimkent refinery of charging too much to process crude, delaying shipments of products to customers, failure to honour payment terms agreed for oil contracts and from trying to monopolise oil refining.
Chimkent officials were not immediately available for comment.
The Kumkol oilfield complex in southern Kazakhstan is linked by pipeline to Chimkent and delivering crude to alternative buyers is complex and costly.
McCrae said that Hurricane was looking to deliver oil to Turkmenistan's Chardzhou refinery, and had plans to deliver to China once the Druzhba rail terminal on the Sino-Kazakh border was completed. This would not be until spring next year.
He did not rule out a complete closure of production at Kumkol if relations with Chimkent failed to improve.
"If it (the refinery) were not to buy any crude from us, our whole oilfield operation would in fact be shut down," he said.
"I don't consider that to be a real possibility, but it's one extreme which shows you what the level of concern is."
Hurricane acquired the former state oil company Yuzhneftegaz in 1996 and has built up production levels and made a major contribution to the local budget of the Kyzyl Orda region where the fields are located.
The company committed to making capital investment of $280 million over six years and within two years had achieved over half that total, he said.
McCrae said the Kazakh government should help settle Hurricane's dispute, because the oil-rich former Soviet republic was in a strong position to win other foreign investors to the energy sector now that Russia's economy was in crisis. "This should be seen as an opportunity, not a disaster."
Hurricane shares Kumkol North, its main producing asset, with Russia's oil major LUKoil <LKOH.RTS> on a 50-50 basis.
The spat with Chimkent threatens to scupper Hurricane's ambitious expansion plans at the Kumkol oil producing region. |
