Zhaikmunai L.P provides an update on its Kazakh operations for the second half and the full year ended 31 December, 2008.

Production volumes for the second half of 2008 increased by 5% to 981,535 bbls, compared to 938,312 bbls for the second half of 2007. Oil production in the second half of the year was lower than expected as falling oil prices and necessary payments on crude oil transportation and export duty obliged the company to reduce crude output and exports by 50 per cent in November and to the minimum technically required level in December 2008. No crude oil was exported at all during December 2008 as the company was waiting for the export duty to be formally abolished, resulting in a temporary but significant increase of oil on storage.

Following the abolition of the export duty in January 2009, the field is now producing 8,500 bopd and achieving targeted export volumes.

Daily production capacity increased significantly, helped by the completion of the oil treatment unit, reaching 8,500 bopd at the end of December 2008, compared to an average of 5,067 barrels per day in 2007.

By the end of December 2008 Zhaikmunai had added four producing wells bringing the number of wells in production to 11 in total.

Kai-Uwe Kessel, Chief Executive, said, "We made significant progress in the second half of 2008 with the completion of three important infrastructure projects: the expanded oil treatment unit, the oil pipeline to Uralsk and the oil loading rail terminal. While we are still planning to maintain capital expenditure on our gas treatment unit, current market conditions and oil prices have led us to review capital expenditure for 2009. This has resulted in a temporary delay to some planned investment projects into 2010/11.

Production and revenues were affected in the latter stages of 2008 after the introduction of export duties on crude sales. However, I am pleased to report that our operations have now returned to planned production and export levels following the abolition of the duties in January 2009."

Tags: Zhaikmunai L.P.