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Kazakhstan 2015 | MINING & ENERGY | INTERVIEW

TBY talks to Christopher Hopkinson, First Deputy Chairman of KazMunayGas (KMG), on the effect of falling oil prices, the Kashagan field, and exploration challenges.

Christopher Hopkinson
BIOGRAPHY
Christopher Hopkinson has extensive experience in the oil and gas industry, and currently holds the position of First Deputy Chairman of the Management Board at KMG. Prior to joining KMG, he was the CEO of International Petroleum, the CEO of Imperial Energy, and Senior Vice-President North Africa of BG Group, TNK-BP, Yukos, and Lukoil. Earlier in his career he held various positions at Shell. He studied physics at the University of St Andrews.

Kazakhstan's economy is already feeling the heat from falling oil prices and reciprocal sanctions between the West and Russia. What is the position of KMG in this challenging environment?

At the moment we are involved in a business transformation process, which is the right way to go. The lower price of oil actually helps, because it gives more impetus to the transformation. In the past, when prices fell to $10 per barrel, companies all over the world were forced to make projects profitable at that price. It makes you think in a completely different way. From my point of view and that of KMG, the oil price coming down is difficult, but we are looking closely at where we can economize and where we can do things more efficiently, while at the same time maintaining our production levels. The business transformation focuses on the future, when the prices rise again and put us in a stronger position.

Production at the Kashagan oil field has been postponed until 2016. What is your strategy to ensure that the delays in oil production there will be compensated by corresponding increases from other major fields?

The delay in production at Kashagan is very unfortunate, and we continue working closely with our partners to make sure that we are sticking to our time schedule. Meanwhile, we are accelerating production at other projects. KMG is working closely with its partners through producing joint venture projects, namely in the Tengiz and Karachaganak oil fields. And of course we have domestic production, which is mostly onshore. The majority of our own onshore fields are 40-60 years old, which is a late stage of development and, thus, it is a challenge to increase production from those fields. Having said that, there are many opportunities and we are working closely with the regions to identify opportunities where we can increase production in a sustainable way. But in that follows best practices that we see in fields such as Samotlor in Russia, where they have gone through the process of increasing production through the use of best practices and appropriate technologies. Obviously, Kashagan was expected to be a huge chunk of production, and so it will be difficult to make up for that in less than two years. Our main task is to move toward value generation.


How is the company supporting the generation of specific knowledge and research in the energy sector?

We have a plan to set up our institute here in Astana, namely the Institute for Drilling, which will train technicians in field development, maximizing recovery, and opportunity identification. In the next few weeks a visualization and communication center will open, with an open-plan, collaborative, and integrated working space, where we will have about 150 institute employees. They will be able to use the latest technology as far as the visualization of our reservoirs goes, and enjoy quick turnaround on models. This will allow us to look ahead and predict the behavior of wells and new approaches that we are intending to implement. This will also give us direct communications with our institute in Aktau and Atyrau, as well as our laboratories, which are going to be fully integrated within one institute structure. We will be able to support our operating fields and our exploration projects—onshore and offshore—by using the latest IT and measurement technologies to speed up the decision-making process.