World's Energy

05-21-2009 - Upstream OnLine - Kazakhstan oil producer KazMunaiGaz Exploration & Production saw its net profit increase 70% year-on-year in the first quarter on foreign exchange gains while core earnings declined. It said net profit for the first three months of 2009 was 108.0 billion tenge ($777.9 million), up from 63.5 billion a year earlier. "The net income increase is mainly attributable to foreign exchange gain of 101.6 billion tenge (pre-tax) following tenge devaluation in February 2009," the company said in a statement. Kazakhstan devalued the tenge by 18% against the dollar in February to prop up its economic competitiveness and save reserves following a similar devaluation in Russia. "Excluding the foreign exchange gain, net income declined 57% year-on-year, mainly reflecting significantly lower crude oil prices in 2009," KazMunaiGaz E&P said. It said first quarter revenues fell 42% to 83.2 billion tenge while operating expenses rose 28% due to the introduction of the rent tax and the mineral extraction tax that replaced royalties this year. KazMunaiGaz E&P said it had entered hedging agreements in February for 36% of its planned monthly output throughout this year. The hedging will protect it in case benchmark Brent crude prices fall below $40 per barrel, but the company will have to give up some of its profit if the price goes above agreed ceilings of $75 to $77 per barrel. Kazakh state energy player KazMunaiGaz owns a controlling stake in London-listed KazMunaiGaz E&P.