Brent climbs to $116.7; KMG and CNPC to double the Shymkent refinery
Published · 13 min read · 11 stories
KazMunayGas and CNPC agreed to prepare doubling the Shymkent refinery to 12 million tonnes by 2030 and expanding the pipelines that feed it, and KMG PetroChem began building ethane and propane pipelines from Tengiz to Karabatan. Bloomberg reported that an arbitration tribunal rejected about $12 billion of Kazakhstan's $20 billion claims against the Kashagan partners, which has not been officially confirmed, and commercial gas output fell in September to its lowest since 2011 during Karachaganak maintenance. Brent rose 6.2% on the week to $116.72, and the National Bank cut its base rate to 15.75%.
The week in a minute
- 1KMG and CNPC: Shymkent refinery from 6 to 12 Mt by 2030; Kenkiyak–Atyrau to be expanded to 15 Mt, Kenkiyak–Kumkol to 20 Mt.
- 2Bloomberg: the tribunal rejected ≈$12bn of Kazakhstan's ≈$20bn Kashagan cost claims; ≈$8bn remain in dispute.
- 3Commercial gas in September: 0.5 billion m³, the lowest since 2011, with Karachaganak under maintenance.
- 4Oil exports to China in nine months: 983 thousand tonnes (+26%); KMG expects 1.7 Mt via BTC in 2026.
- 5Brent +6.2% on the week to $116.72; base rate 15.75%; the tenge at 451.05 per dollar.
The week on the map
The fields in this issue's stories; the number is the story.
- 1Urikhtau, Akshabulak Center, NuralyKMG and CNPC: the Shymkent refinery to reach 12 Mt by 2030, with its pipelines expanded
- 2TengizConstruction starts on ethane and propane pipelines from Tengiz to Karabatan
- 3KashaganBloomberg: arbitration rejects about $12 billion of Kazakhstan's Kashagan claims
- 4Kalamkas Sea, KhazarKMG: LUKOIL stays a partner; the US licence for talks on selling its assets is extended to 21 November
- 5KarachaganakCommercial gas output was 0.5 billion m³ in September, the lowest since 2011, during Karachaganak maintenance
The week in numbers
ICE Brent December futures, Friday's closing price: according to Kapital.kz, at 02:00 Astana time on 24 October it traded at $116.93, 0.18% above the close (editors' arithmetic). On Friday afternoon the price reached $117.
TTF front-month (November) futures on ICE, evening of 23 October; the weekly series is the Monday–Thursday settlements reported by PRIME plus the Friday quote; on 22 October the price topped $1,050 for the first time since late December 2022. Kazakhstan has no single price: the Energy Ministry sets wholesale caps on commercial gas by region; no change was reported this week.
The National Bank's official rate for 24–27 October.
Projects
KMG and CNPC: the Shymkent refinery to reach 12 Mt by 2030, with its pipelines expanded
On 22 October Askhat Khasenov, chairman of the KazMunayGas management board, and CNPC president Zhou Xinhuai discussed joint projects in Astana. The Shymkent refinery is to grow from 6 to 12 million tonnes a year by 2030: the feasibility study is nearly complete and work is moving to FEED and detailed design. To supply the plant with crude, the companies decided to design expansions of the Kenkiyak–Atyrau pipeline to 15 million tonnes and Kenkiyak–Kumkol to 20 million tonnes a year. At the Urikhtau gas project in Aktobe region, output of up to 200 million m³ of raw gas a year is expected by year-end; the second stage is due at the end of 2027, and at full capacity output will reach up to 1 billion m³ a year. At a technical seminar the same day, Kazgermunai said six of seven appraisal wells drilled in 2021–2026 at Akshabulak, Aksai and Nuraly flowed oil, adding more than 1 million tonnes of recoverable reserves.
Why it matters. Shymkent is one of the country's three large refineries, and doubling it is meant for growing domestic fuel demand. For producers in the south and west the bigger point is the pipelines: expanding Kenkiyak–Atyrau and Kenkiyak–Kumkol gives more room to move crude to the domestic market by pipe. No construction dates or costs were given.
For the pipelines, capacity after the expansion; its design documents are to be prepared.
КазМунайГаз, 22 OctoberMore pipeline capacity to supply crude to Shymkent once the expansions are built.
Decisions are still at the design stage: feasibility study, FEED and design, with no budget or build dates.
Design work for a refinery expansion and two pipelines means future engineering and equipment orders.
Construction starts on ethane and propane pipelines from Tengiz to Karabatan
On 22 October KMG PetroChem, a KazMunayGas subsidiary, began building two trunk pipelines in one corridor in Atyrau region, for liquefied ethane and propane. They will run from the gas separation complex at Tengiz to the polyethylene and polypropylene plants in the NINT special economic zone near Karabatan. Each is about 210 km long; the ethane line will carry 1.6 million tonnes a year and the propane line 1.1 million tonnes. A technical regulation for such pipelines, the first in the CIS, was approved for the project earlier.
Why it matters. The pipelines link Tengiz feedstock to the Karabatan gas chemical plants; without them the polyethylene and polypropylene units would not get their ethane and propane. The company promises to rely on Kazakh suppliers and contractors; no cost or completion date was given.
Another large build in the Tengiz–Karabatan corridor.
Cost and start-up date are not disclosed.
KMG promises to bring in local equipment suppliers, contractors and service companies.
Companies
Bloomberg: arbitration rejects about $12 billion of Kazakhstan's Kashagan claims
On 22 October Bloomberg, citing people familiar with the proceedings, reported that an international arbitration tribunal had rejected part of Kazakhstan's claims against the members of the NCOC consortium, which develops Kashagan. Kazakhstan is seeking to recover about $20 billion of disputed project costs; according to the agency, claims of about $12 billion, for 2011–2015 spending, were rejected as filed too late, while claims of about $8 billion more remain in the proceedings. Bloomberg received no official confirmation from the tribunal, the Energy Ministry, NCOC or the consortium members. The proceedings continue: overall, according to the agency, Kazakhstan is seeking more than $150 billion in compensation.
Why it matters. The dispute is about which costs the contractors may recover from production under the production sharing agreement, which decides how much of Kashagan's oil goes to the state. Until the parties confirm the ruling, it remains a report from sources; the outcome on the remaining $8 billion also matters for talks on the field's further development.
- Rejected: filed too late — 12
- Still in dispute — 8
The dispute does not affect production; the proceedings continue.
The ruling is not officially confirmed; the outcome on the remaining $8 billion is unknown.
No direct effect on orders.
KMG: LUKOIL stays a partner; the US licence for talks on selling its assets is extended to 21 November
On 21 October the US Treasury (OFAC) extended to 21 November the licence allowing talks and conditional agreements on the sale of LUKOIL International GmbH, which holds LUKOIL's foreign assets; it was due to expire on 22 October, and any deal needs a separate permit. On 23 October Askhat Khasenov, chairman of the KMG management board, told reporters that LUKOIL remains a strategic partner and that the joint venture's financing issues are being worked on. The venture is Kalamkas-Khazar Operating (50% each for KMG and LUKOIL), which develops the offshore Kalamkas Sea and Khazar blocks: according to Kursiv, all its bank accounts were closed in 2025 because of sanctions, and the final investment decision on a budget of about $6.5 billion, planned for December 2025, has not been taken. The venture's 2025 loss was 7.3 billion tenge, against 9.2 billion a year earlier.
Why it matters. Until LUKOIL's stake is settled, the venture cannot raise financing, and the Caspian project stays without a final decision. The US extension leaves a month for talks on selling the Russian company's foreign assets.
- 1
OFAC extends the licence for talks on selling LUKOIL International
- 2
Khasenov: LUKOIL remains a strategic partner
- 3
New licence expiry date
KMG is looking for ways to continue the project with its current partner.
The final investment decision on a $6.5 billion project is almost a year overdue.
Without an investment decision there will be no large orders to develop the offshore blocks.
Production
Commercial gas output was 0.5 billion m³ in September, the lowest since 2011, during Karachaganak maintenance
According to National Statistics Bureau data processed by the DataHub credit bureau and reported by Kapital.kz on 19 October, Kazakhstan produced 0.5 billion m³ of commercial gas in September, 4.3 times less than in August and 3.3 times less than a year earlier, the lowest since records began in October 2011. More than 80% of commercial gas usually comes from West Kazakhstan region, home to Karachaganak: there output fell 5.5 times on the month to 370 million m³, and oil output 4.9 times to 206 thousand tonnes. Karachaganak was under planned maintenance in September.
Why it matters. One region, where Karachaganak is the main producer, supplies more than 80% of the country's commercial gas, so maintenance there shows up straight away in national statistics. This is a dip during the September maintenance, not a new level; October data are not out yet.
Planned maintenance at Karachaganak explains the September fall.
September will pull down the year's gas and oil totals in West Kazakhstan region.
The maintenance work means orders for service companies at the field.
Transport and exports
KMG expects 1.7 Mt of oil via BTC in 2026; exports to China +26% in nine months
On 23 October at the Media Energy Talks forum, Askhat Khasenov said KMG plans to ship 1.7 million tonnes of oil this year through the Baku–Tbilisi–Ceyhan (BTC) pipeline and more next year, with the volume under discussion. In his words the route has prospects but does not replace the Caspian Pipeline Consortium (CPC), "the volumes are not comparable", and CPC remains the main export route. On 20 October KazTransOil said the Atasu–Alashankou pipeline carried 8.517 million tonnes of oil in January–September (255 thousand tonnes more than a year earlier), of which 7.533 million tonnes was Russian oil in transit to China and 983 thousand tonnes was Kazakh oil for export, 26% more than in the first nine months of 2025.
Why it matters. Kazakh oil exports to China are growing but remain small: almost nine tenths of the flow through Atasu–Alashankou is Russian transit (editors' arithmetic). Together with BTC these are still hundreds of thousands to a few million tonnes, against the bulk that goes through CPC.
- Russian oil in transit — 7.53
- Kazakh oil exports — 0.98
BTC volumes are set to grow again in 2027.
Most exports still depend on CPC.
No direct effect on orders.
Refining
KMG head on gasoline quotas for Russia: the domestic market comes first; AI-92 stocks at 310.9 thousand tonnes
On 23 October Askhat Khasenov commented on reports of unused gasoline export quotas to Russia: he said the quota is issued to the country as a whole, not only to KMG, volumes are set against the balance every month, and the first priority is the domestic market; he did not confirm the figures themselves. On 16 October Reuters, citing sources, reported that the Atyrau and Pavlodar refineries had been given July–September quotas to export 17.5 thousand tonnes each of AI-92 to Russia, but shipped nothing. Only the Kondensat refinery sent fuel to Russia, and even it shipped gasoline mostly to other countries; its total exports for the quarter were 42.5 thousand tonnes against a quota of 100 thousand. According to estimates by sources, by 16 October AI-92 stocks at depots had risen to 310.9 thousand tonnes and AI-95 to 107.7 thousand tonnes.
Why it matters. Fuel output is rising while exports are limited by quotas, which were not even used up in the third quarter, so depot stocks are building up. For refineries this is a question of throughput and storage; for consumers it is a sign that there is enough gasoline at home.
Estimates by Reuters sources, as cited by Kursiv.
Kursiv Media, 19 OctoberThe Energy Ministry sets fuel export volumes based on the domestic balance.
The quota and stock figures come from Reuters sources; KMG did not confirm them.
Rising stocks lift demand for storage and fuel logistics.
KMG International in nine months: net profit of $269 million, Petromidia at 97% of capacity
On 20 October KMG reported January–September results for its Romanian subsidiary KMG International: EBITDA of $469 million (+73% on the same period of 2025) and net profit of $269 million (+219%). The Petromidia refinery processed 4.087 million tonnes of feedstock, an average of 14.67 thousand tonnes a day, about 97% of design capacity. Retail EBITDA was $87 million.
Why it matters. KMG's European refinery runs almost at full capacity, and its company's profit more than tripled; it feeds into the national company's consolidated results.
This concerns KMG's business abroad, not work in Kazakhstan.
A more than threefold rise in profit will support KMG's nine-month results.
No direct effect on orders in Kazakhstan.
Regulation
Energy Ministry: 80% of energy resources under well-to-pump digital tracking by 2028
On 22 October the Energy Ministry said that, together with a member of the Kurultai, it had checked metering and accounting at a filling station, an oil depot and a KMG site. The ministry is building a single digital system that tracks oil and oil products at every stage, from the well to the filling station. Under the Digital Qazaqstan strategy targets, such tracking is to cover 20% of energy resources in 2026, 60% in 2027 and 80% by 2028. The system is meant to match accounting data, flag discrepancies and cut losses.
Why it matters. For subsoil users, refineries and filling station chains this means new requirements for meters and for reporting data to the state system. The announcement named no regulation with specific deadlines.
Prepare for end-to-end digital tracking of output and deliveries.
More transparency in oil and fuel accounting.
Demand for meters and IT systems for depots and filling stations.
Prices and markets
Brent +6.2% on the week: $116.72 on Friday after a 4% jump on Thursday
From Monday to Wednesday December Brent closed near $109: $109.55, $108.78 and $108.82 a barrel. On Thursday it rose $4.35 (+4%) to $113.17, the highest close since 4 May; on Friday afternoon it reached $117 and ended the week at $116.72. The rise came amid reports of attacks on Saudi oil facilities and shipping risks: according to the International Maritime Organization, there were 27 attacks on merchant ships in the Strait of Hormuz since the start of October, more than in any month since the conflict began in late February.
Why it matters. The price is almost $47 above the $70 assumed in the 2027 draft budget and supports export earnings and receipts to the National Fund. But the rise is driven by Middle East supply risks rather than demand, so it can reverse just as quickly.
ICE Brent December futures closing prices. Thursday's close is as reported by Interfax; the editors derived the other days from the change on the previous close given by Interfax and Kapital.kz.
Kapital.kz, 24 OctoberClosing prices above $108 all week keep revenue per barrel high.
The jump reflects supply risks; worth testing projects at different prices in the economic model.
The price does not change this week's orders.
The National Bank cuts its base rate to 15.75%; the tenge ends the week at 451.05 per dollar
On 23 October the National Bank cut its base rate from 16.25% to 15.75% a year (corridor ±1 pp): annual inflation has slowed for twelve months in a row and was 9.3% in September. The bank names high world energy prices due to the Middle East situation as an external inflation risk; it sees a low probability of another rate change before the end of 2026, with the next decision on 4 December. Over the week the official rate moved between 452.59 and 447.94 tenge per dollar, and after Friday's trading the rate for 24–27 October was set at 451.05, 1.07 tenge lower than a week earlier.
Why it matters. The base rate is the benchmark for tenge borrowing costs, so the cut makes debt slightly cheaper for companies that work in the national currency. The exchange rate barely changed over the week, even though oil rose.
National Bank rate for the date; one rate each for 17–19 and 24–27 October.
Kapital.kz, 24 OctoberThe rate barely changed over the week.
The rate is 0.5 pp lower; the National Bank sees another change this year as unlikely.
Tenge working-capital loans may get slightly cheaper.
What's next
- KazMunayGas publishes its nine-month operating results (26–30 October, according to its investor calendar).КазМунайГаз
- ExxonMobil, a TCO shareholder and Kashagan partner, publishes its third-quarter results.ExxonMobil
- Meeting of the seven OPEC+ countries, Kazakhstan included: December output levels.OPEC
- Public hearing in Atyrau on the Atyrau refinery's environmental permit for 2026–2029, 15:00, also on Zoom.Минэкологии РК, реестр общественных слушаний
- Last day for bids in the 56-block oil and gas auction (held on 25 December). Every block, fee and date — subsoil auction; the rules — hydrocarbon auction.Kapital.kz
- The extended US licence for talks on selling LUKOIL's foreign assets expires; LUKOIL is KMG's partner in Kalamkas Sea and Khazar.Интерфакс
- SPE Caspian Technical Conference and Exhibition at the Atyrau University of Oil and Gas, 24–26 November.Kapital.kz
- The National Bank announces its next base rate decision at 12:00 Astana time.Национальный банк РК
cost oil
Cost oil is the share of output under a production sharing agreement that the contractor receives to recover its costs; the rest, profit oil, is split between the state and the contractor. So a dispute over which Kashagan costs can be recovered is a dispute over how much oil goes to the state: this week Bloomberg reported that the tribunal had rejected part of such claims by Kazakhstan, about $12 billion out of $20 billion.
To the glossaryThe digest reviews the week's reports; the facts and figures belong to the sources cited. It is not investment or legal advice.