In a securities filing on Wednesday, Exxon Mobil Corp cautioned about possible hazards to its oil exports from Kazakhstan, which generated $2.5 billion in profits last year. The security of Kazakhstan’s oil exports has been under scrutiny since Moscow’s invasion of Ukraine a year ago this week.
Exxon and Chevron are significant stakeholders in the country’s oil production and associated export pipeline.
Kazakhstan shares an extensive 4,750-mile (7,644 km) border with Russia, and its oil exports predominantly travel through a Caspian Pipeline Consortium (CPC) line passing through Russia and arriving at a Russian Black Sea export terminal. If the CPC pipeline or terminal were to close, it would result in over 1% of the global oil supply being shut in, leading to billions of dollars in lost income for the producers.
According to the filing, Exxon reported that its interest in Kazakhstan’s oil fields yielded a daily output of 246,000 barrels of oil and gas last year, generating approximately $2.5 billion in after-tax earnings.
Exxon “could experience a loss of cash flows of uncertain duration from its operations in Kazakhstan,” the filing said if oil exports through the CPC pipeline are “disrupted, curtailed, temporarily suspended.”
With a 25% stake in the Chevron-led Tengizchevroil (TCO) oil production joint venture, which oversees the Tengiz and Korolev oil fields in Kazakhstan, and a 16.8% working interest in the Kashagan field, the U.S. oil major is a significant player in Kazakhstan’s oil industry.
Chevron, one of the joint venture’s operators, produces over 380,000 barrels per day, which accounts for more than 12% of its total output, from Kazakhstan. The company’s objective is to raise the total output at Kazakhstan’s largest field, Tengiz, by 40% to about 1 million barrels per day.
In the previous month, Chevron’s finance chief, Pierre Breber, stated that its Kazakh production in 2022 was less than 10,000 barrels per day on average lower than expected due to temporary outages.
According to Exxon’s filing, the company’s worldwide workforce decreased by 1,000 employees last year, to a total of 62,000, as part of its ongoing efforts to reduce costs and enhance shareholder returns. This marks the third consecutive year that Exxon has downsized its workforce.
