HOUSTON (Reuters) – Exxon Mobil Corp (NYSE:) warned in a filing of potential risks to its Kazakhstan oil business, which generated $2.5 billion in profits last year.
Threats to Kazakhstan’s oil exports have been in the spotlight since Moscow invaded Ukraine a year ago. Exxon and Chevron are the main players in the production and export of the Central Asian country.
Kazakhstan borders Russia for 7,644 kilometers and its oil exports travel primarily via a Caspian Pipeline Consortium (CPC) line that passes through Russia and lands at a Russian export terminal on the Black Sea.
Any closure of the CPC pipeline or terminal would cut off more than 1% of the global oil supply and cost producers billions of dollars in lost earnings.
Exxon said its stake in the Kazakh oil fields produced 246,000 barrels of oil and gas a day last year. Crude oil delivered an after-tax gain of about $2.5 billion, the filing said.
The US major “could suffer a loss in cash flow of uncertain duration from operations in Kazakhstan”, the document reads, in the event that oil exports through the CPC pipeline are “interrupted, reduced or temporarily suspended”.
Exxon holds a 25% stake in the Tengizchevroil (TCO) oil production joint venture – led by Chevron and which controls the Tengiz and Korolev fields in Kazakhstan.
Chevron produces about 380,000 barrels per day, or more than 12% of its total production from Kazakhstan and also has interests in the Kashagan field.
The company aims to increase total production at Kazakhstan’s largest field, Tengiz, by 40 percent to about 1 million barrels per day.
Last month, Chevron CFO Pierre Breber said Kazakh production in 2022 was losing less than 10,000 bpd on average due to temporary outages.
“We have risks in our business, everywhere. And of course we manage them,” Breber said. “I can’t predict the future, but the CPC has been very reliable in 2022.”
British major Shell PLC and Italy’s Eni (BIT:) also have stakes in the Caspian Pipeline Consortium.
Exxon said its global workforce shrank by 1,000 to 62,000 last year in an effort by the major to cut costs and boost returns for shareholders. The company has reduced its staff for the third consecutive year.
(Translated by Enrico Sciacovelli, editing Claudia Cristoferi)