Acacia Mining Share Discussion Threads

[desert orchid] 31/7/2006 03:41

Kazakhstan: Joining The Global Oil Producing Elite

By Helen Campbell
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The Central Asian state of Kazakhstan, whose production dropped to just 415,000 bpd in the first few years after the collapse of Soviet rule, is joining the ranks of the global oil producing elite. After years of negotiations, the vast desert country finally joined the Baku-Tbilisi-Ceyhan pipeline consortium in mid-June, a signing that came just weeks after the country made its first shipment of oil along a new pipeline to China.

Added to the Caspian Pipeline Consortium (CPC) line - running from the giant Tengiz field of western Kazakhstan to the Russian port of Novorossiysk and now in its fifth year of operation - landlocked Kazakhstan is in the enviable and long sought-after position of having direct export routes to two massively hungry markets: western Europe and China.

This is just as well, because Kazakhstan will soon become one of the world's top ten oil producers. The massive level of foreign investment ploughed into Kazakhstan's oil sector by almost all the global oil majors over the past 11 years has helped the country boost its oil production from 530,000 bpd in 1992 to a current level of almost 1.25m bpd. Kazakhstan has a goal to increase this to over 3m bpd over the next decade, with about 1m bpd of that targeted production coming from the giant Kashagan field in the Caspian Sea.

It is undoubtedly these supergiant fields that will fill these high capacity pipelines, but contributing to Kazakhstan's growing volumes over the next few years will be a small army of determined foreign oil juniors, some of them currently putting all their eggs in one basket and focusing solely on Kazakhstan.

Says Michael Masterman, chief executive of Caspian Holdings, based in the UK and owner of a 100 per cent stake in the Zhengeldy field in Kazakhstan's prolific western region: "We are not operating in downtown Surrey or in Texas so yes, it is obviously a different form of government but, in terms of the overall environment, Kazakhstan is by far and away the most politically stable of all the FSU countries."

Zhengeldy was discovered by the Soviets in 1939. Caspian Holdings' strategy is to develop shallow onshore oil fields that were discovered some time ago but not developed due to the lack of suitable technology being available. It acquired the oilfield in early 2004, listed on AIM in November 2004, and has since drilled 14 wells on the field. In March/April, the company exported its first oil from Zhengeldy via pipeline, which raised the wellhead price per barrel from US$17.50 to US$65, earning it a net US$40 per barrel after transportation costs, Masterman told oilbarrel.

"We are moving the company gradually to a position where it can fund its own drilling and are doing a well a month at the moment," Masterman says. "We expect to drill another 7-9 wells this year."

Another company among those active in Kazakhstan is Channel Islands-registered CanArgo. In late June, the company announced it would spin off its Kazakh assets by seeking a listing on the London Alternative Investment Market (AIM) in autumn 2006 for Tethys, the subsidiary through which its Kazakh interests are held. CanArgo said it would retain a significant but not controlling interest in Tethys, which would allow it to raise financing to boost drilling and development operations on its Kyzyloi gas development and Akkulka and Greater Akkulka exploration licences, including deep drilling.

Kyzyloi, one of Kazakhstan's first dry gas developments, might have started production this summer but, owing to a shortage of compressors, is now aimed to produce first gas around early March 2007, says a spokesman for the company. An initial plateau rate of 625,000 cubic metres of gas per day from six wells is expected. Compressors necessary to raise the pressure of the gas to allow it to be exported via the main Bukhara-Urals gas trunkline are being sourced from China, and CanArgo has plans for a further five wells on the field and expects to commence this drilling programme in Q3 2006.

CanArgo, through its subsidiary, has also acquired a 100 per cent interest in the Greater Akkulka contract, covering some 10,000 sq km surrounding the Akkulka exploration area in the North Ustyurt basin to the north east of the Aral Sea. Shallow gas and the potential for oil and condensate in the deeper prospects have been identified.

Also busy drilling is London-based Max Petroleum, which has stakes in Blocks A&E, East Alibek and the Astrakhansky exploration block. The company hopes to reactivate old wells on Blocks A&E that were shut in and is confident of further discoveries on the licence. Max plans to drill on the East Alibek licence in Q3 2006.

Its most recent acquisition, the Astrakhansky licence, is believed to be an extension of the large Astrakhan gas-condensate field discovered in 1976 by Gazprom with an estimated 85 tcf of gas and 3.4 bn barrels of condensate. It is also adjacent to the Imashevsky field under development jointly by Gazprom and KazMunaigaz. Max will initially target three exploration prospects, namely: Imashevsky South, Imashevsky South-West and Imashevsky East and, subject to availability of seismic crews, hopes to finalise seismic acquisition by the end of 2006 and drill one or more exploration wells in 2007.

Block E looks to be particularly promising, backed up by seismic data that gave 'clear indications of deep structures in the pre-salt... that are analogous to the Tengiz oifield,' the company said during an operations update in January 2006.

"This is exciting because Tengiz, a mere 64km away, contains over 9bn barrels of proven oil reserves," said analysts at WG Ireland stockbrokers in a February 2006 (strong-buy) research note. "Given that the nearest major subsalt field, Kairan, is only 20 km away from Block E, the chances of a major field have clearly increased with confirmation of drillable structures. We expect the world's biggest oil companies to sit up and take notice."

And sit up and take notice they probably will. Although Kazakhstan has a stable regime, performs well in the transparency league tables of Former Soviet Union countries and has opened its arms wide to investment from foreign companies, its government recently introduced tighter rules around oil and gas agreements in order to raise the government-owned stake in its nation's resource. In June 2003, the government announced a new Caspian Sea development program, which called for new offshore blocks to be auctioned in 2004. In 2005, however, new restrictions to new production sharing agreements (PSAs) were brought in. These include the stipulations that the state owned oil and gas concern KazMunaiGaz must hold a minimum 50per cent of any PSA, and will be the contractor in all new offshore PSAs.

In addition, amendments to Kazakh tax law boosted the state's share of oil income to between 65 and 85%, and investors are no longer comforted by the guarantee of a static tax rate throughout contract duration. Since the beginning of 2004, oil exporters must pay taxes linked to the oil price, and with the volatility of crude being an occupational hazard, this is particularly hard to take. The rate payable ranges from 1 per cent when oil prices are around US$19 per barrel to over 30 per cent if prices rise above US$40 per barrel.

Despite these tighter reins on national resources and, quite rightly, an unwillingness to see its huge volumes of surplus oil and gas exported by foreign entities without maximising the revenues to its own national budget, Kazakhstan is an investment favourite. Standard & Poor's revised its outlook in June to positive from stable.

"The ratings on Kazakhstan reflect the government's strong balance sheet and prudent fiscal policy stance, robust external liquidity, and good growth prospects, buoyed by high oil prices," said S&P credit analyst Luc Marchand. "Institutional and governance weaknesses, along with a weak economic structure, remain key constraints on the ratings. We expect that the government will continue to pursue a fiscal policy that is aimed at decreasing the public sector debt burden, while gradually addressing the need for greater social and infrastructure spending. Risks to the budget from oil price fluctuations have been largely mitigated by the government's accrual of substantial reserves."

Kazakhstan's determination to maintain a high degree of control is clear, and no more so than when KazMunaiGaz bought part of BG's 16.67 per cent stake in the greatest Kazakh oil prize, the offshore Kashagan field in 2005. It is not only the local giant that has been seeking to take control; Chinese interests such as CNPC, and Russian behemoth Lukoil have in recent years swallowed smaller companies previously synonymous with the Kazakh upstream, such as Canada's PetroKazakhstan (formerly Hurricane Hydrocarbons) and UK minnow Nelson Resources.

And US company Chaparral Resources, which owns 60% of the license to develop the Karakuduk oil field with proven reserves of 45m barrels, entered into a merger agreement with Lukoil in March this year. It had in January 2006 announced a new chief executive in the shape of Boris Zilbermints, Lukoil's regional director for Kazakhstan...

If they strike it big, some of the other companies above, and others in Kazakhstan such as Canada's Transmeridian and Big Sky Energy Corp of the US, would be likely targets for takeover by the big guns and, if lucky enough to strike a big enough find in the right place, could be looking to make a tidy sum.

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Helen Campbell is a graduate in modern languages, speaking French, German and Russian. For the past eight years she has been an energy writer for a range of industry publications. Her special interests are Russia and the rest of the former Soviet Union

[d3lbert] 22/7/2006 20:48

Superb!

Excellent advice from these guys.

[pigsty] 17/7/2006 20:48

Anything fresh on CanArgo Desert Orchid? You are doing a good job.

[fairfax ache] 29/6/2006 21:39

-o00o--'(_)'--o00o-

[bilpri] 26/6/2006 14:46

get not found!!

[desert orchid] 02/5/2006 21:28

Spin off ???????????????

TPI has further exploration and development plans for the Akkulka and Greater Akkulka areas, including further shallow gas exploration, tie-in of new discoveries and exploration for potential in the deeper Jurassic and Triassic prospects identified on recent seismic re-interpretation. Given this forward program, CanArgo is looking at alternative ways to finance the activities of TPI which will minimise dilution for CanArgo's shareholders and which will provide the necessary capital for growth. One possible option which is being considered to bring in additional capital to TPI is to list TPI as a separate pubic company in which CanArgo would retain a significant stake.

[desert orchid] 02/5/2006 00:52

Property investor faces jail after theft admission
By Nikki Tait, Law Courts Correspondent
Published: April 25 2006 03:00 | Last updated: April 25 2006 03:00

Gerald Smith, the property investor and former director of Orb Estates, is facing a jail sentence after entering a last-minute plea of guilty to 11 charges of theft and false accounting at Blackfriars crown court yesterday.

The counts, dating back to events in 2002, to which Mr Smith pleaded guilty included a charge that he stole £8m from Izodia, the failed e-commerce software company previously known as Infobank, which was formerly listed on the Alternative Investment Market.

[canford cliffs] 01/5/2006 19:48

John...........regrettably, yer certs are worth nowt!

[netcurtains] 01/5/2006 13:30

I had about £3K of ACA shares.

Can I get them converted into anything (I still have the certificate)?

I have not read this whole thread (sorry) - could someone tell me what the current situation is - have I lost the full £3K or do I still own some sort of share holding in an oil company?

Cheers John

[archer1415] 27/4/2006 19:12

Sorry cdrnet, my specs went astray. Here's the link.

[cdrnet] 27/4/2006 18:38

It might do if you provide a web link, rather than the location on your computer's hard drive :-)

[archer1415] 26/4/2006 22:01

ITS A GAS!

C:\Documents and Settings\My Trader\My Documents\My File Downloads\It's a Gas_April 2006_lowres.pdf

Answers many questions.

[Abuse team] 10/2/2006 14:06

Post removed by ADVFN

[mstaub] 06/2/2006 09:45

I was under the impression I could get these converted into the new venture? Were all shareholders advised about this?

Do you know anyone i could contact directly to get informatiôn on how i should proceed?

I tried to contact CGT but they advised me to contact atlantic caspian doh!

thanks in advance.

Michael

[canford cliffs] 04/2/2006 11:00

Hi Stevei................its worth remembering that you can get a CGT write off by contacting your tax office!

[steveib] 04/2/2006 09:36

i had 750.000 and now hold 75 mate so your 65,000 are now 6 at 1p and 0.5 held in a bank somewere
hope that helps
steve

[crystalclear] 12/1/2006 17:55

I asked Barclays Stockbrokers for a share certificate.
I have the certificate now.
It only took them about 18 months to do it!