Arawak Energy, an independent oil and gas exploration and production company, has temporarily curtailed oil production at its four operated fields in Kazakhstan as a result of the continuing high taxation and export duty provisions levied by the authorities in Kazakhstan and the significant drop in international and domestic oil prices.

The imposition of customs export duty (CED) on export sales, currently equivalent to $28.31 per barrel, combined with the recent fall in world oil prices and the collapse of the domestic market in Kazakhstan, have significantly impacted margins from Arawak’s operations in the country.

Despite a court ruling in late September upholding an initial decision by the authorities to exempt the Akzhar field from CED, and a subsequent exemption from the duty in October, CED was once again demanded in November. In common with several other smaller producers whose export economics have become non-viable, Arawak had been attempting to sell its production on the local market, which has now become saturated and prices have fallen to below the cost of production.

Crude oil production at the Akzhar, Besbolek, Karataikyz and Alimbai fields, which are each 100% held and operated by Arawak, has been reduced to the minimum levels necessary to maintain the operating capability of the processing facilities. Production and exports from the Company’s non-operated Saigak field, which is governed by a production sharing agreement and exempted from CED, has not been affected.

Tags: Arawak Energy Corporation