KazMunayGas Exploration & Production, an upstream subsidiary of national oil and gas holding company KazMunayGas, has asked the government for help as low oil prices are draining its profits. The company suggested tax breaks and keeping domestic crude oil price at the highest possible level, its CEO Abat Nurseitov has revealed.

The company is holding talks on export duty breaks and is seeking a tax holiday on mineral extraction tax for EmbamunayGas, one of the company’s main production units. The early presidential election that was held on April 26 slowed down the talks but the company hopes to renew negotiations in May.

The company has reported a dramatic 99% drop in its net profit for the first quarter. In January-March, KazMunayGas E&P’s net profit amounted to KZT1.6bn (€8mn), down from KZT123bn reported in the same period of the previous year. Revenues fell by 47% y/y to KZT117bn. The company blamed low oil prices for such a bad result.

The company is also afraid that the Energy Ministry will not accept the price it has set for domestic crude sales, which is KZT23,000 (over $126) per barrel, down by 53% from the same period of last year. Still, Kazakhstan’s blend was trading at $64 per barrel at the last weekend of April.

Despite this adverse development, the company is determined to fulfil its production plan for this year. In the first quarter, output went down by 0.4% y/y to 3.037mn tonnes because of naturally declining production at minor subsidiaries. Despite this, the company’s production is 55,000 tonnes above the plan. The company has closed 200 unprofitable wells to optimise production.

KazMunayGas E&P was created in 2004. It is an upstream arm of state-owned KazMunayGas. The company’s shares are listed on the local stock exchange KASE and its GDRs are traded on the LSE. KazMunayGas E&P is among the three largest oil producers in Kazakhstan.