On Wednesday, Exxon Mobil Corp. (XOM.N) cautioned in a security filing about possible hazards to its oil operations in Kazakhstan, which generated $2.5 billion in profits last year.
Threats to Kazakhstan oil exports have been in the spotlight since Moscow invaded Ukraine a year ago this week. Exxon and Chevron (CVX.N) are significant holders in the Central Asia country’s oil production and related export pipeline.
Kazakhstan shares a 4,750-mile (7,644-kilometer) border with Russia. Its oil exports travel mainly through a Caspian Pipeline Consortium (CPC) line through Russia and land at a Russian Black Sea export terminal.
Any CPC pipeline or terminal closure would shut in more than 1 percent of the global oil supply and cost its producers billions of dollars in lost income.
Exxon said its stake in Kazak oil fields produced 246,000 barrels of oil and gas per day last year. The filing noted that oil provided after-tax earnings of about $2.5 billion.
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.”
The US oil major owns a 25% interest in the Chevron-led Tengizchevroil (TCO) oil production joint venture, which controls the Tengiz and Korolev oil fields in Kazakhstan, and a 16.8% working interest in the Kashagan field.
Chevron produces around 380,000 bpd or more than 12% of its total output from Kazakhstan. The company aims to boost total production by 40% at Kazakhstan’s largest field Tengiz, to around 1 million bpd.
Last month, Chevron finance chief Pierre Breber said its 2022 Kazak production lost less than 10,000 barrels a day on average from temporary outages.
“We have risks in our business, everywhere. And, of course, we manage those risks,” Breber said. “I can’t predict the future, but CPC was very reliable in 2022.”
London-based Shell PLC (SHEL.L) and Italy’s Eni also have stakes in the CPC.
Exxon’s filing showed its global workforce fell by 1,000 last year to 62,000 employees as it continued to cut costs and boost shareholder returns. It was the third year in a row Exxon reduced its workforce.
