EXPERT OPINION
Overview of the Kazakhstan oil field service market in 2020
Vitaly Mikhalchuk , Research Supervisor Central and Support Activity Deloitte CIS
Nazira Nurbayeva , Partner Tax and Legal Department Deloitte Kazakhstan
One of the consequences of the pandemicrelated oil price crash has been oilfield service financing cuts . In this article , we discuss the key conclusions from the recent Deloitte Research Centre review of the effects of oil market changes in 2020 , as well as the prospects for global and Kazakhstan oil production , the financing of oilfield services and the major oilfield service market segments .
Main global oil and gas sector trends
In 2020 Q1 , the coronavirus epidemic caused a sharp decline in global hydrocarbon consumption . To eradicate this global misbalance , the major players agreed to limit production in April 2020 . In May-June , total oil production cuts according to the OPEC + deal amounted to 9.7 million barrels / day . This figure was gradually relaxed later in the year to 7.2 million barrels in January 2021 . In 2021 , OPEC + has agreed to review oil production cuts monthly , with the base plan involving a relaxing of production restrictions by up to 0.5 million barrels / day per month .
In 2020 , total OPEC and OPEC + member oil production fell 10.6 % to 48 million barrels / day . During the December OPEC + meeting , members agreed to increase monthly total oil production for 2021 by 500 thousand barrels / day . As a result , in January 2021 , members agreed that Russia and Kazakhstan could increase production by 65 and 10 thousand barrels / day in February and March . The February quotas for other OPEC + members remained at the January 2021 level . Saudi Arabia also agreed to keep production in February and March at 1 million barrels / day , which is lower than its quota . The members have preliminarily agreed to a gradual increase after March of 2 million barrels / day against the December 2020 quota , which may be achieved in April-June 2021 .
In 2021 , total OPEC and OPEC + oil production may grow by 5.5 % year-onyear , to 50.7 million barrels / day . Under current conditions , the OPEC + deal in 2021 will result in Russian liquid hydrocarbon ( including gas condensate ) production of 535-540 million tonnes , while in Kazakhstan that figure will be 86 million tonnes .
The global oil consumption recovery rate will depend greatly on the effectiveness of mass vaccination programmes . Many energy-intensive sectors , such as transport and tourism , will continue to struggle for much of 2021 , hindering hydrocarbon consumption growth . With this in mind , oil production and consumption will only return to 2019 levels at the end of 2022 , provided there are no unforeseen changes in supply .
Global capital hydrocarbon exploration and production costs
In 2020 , many major oil and gas companies reported a 20 % or higher reduction in capital exploration and production costs for the year . For global oilfield services , this means the end of a three-year growth period that began in 2016 .
Geological exploration costs are lower for new site developments , projects producing non-traditional crude and low-profit investment portfolio projects . Infrastructure maintenance and well repair costs at active fields have been less affected .
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