On Tuesday, Chevron (NYSE:CVX) and Shell (NYSE:SHEL) reportedly slashed oil and gas production at a major field in Kazakhstan.
This incident marks the first time a Ukrainian strike on Russian energy infrastructure has directly disrupted Western oil companies operating abroad.
Impact of Drone Attack on Karachaganak Field
As per Reuters, the move came after a Ukrainian drone attack that damaged the Orenburg gas processing plant in Russia.
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Notably, the Orenburg gas processing plant, which is located about 1,700 km (1,056 miles) east of Ukraine, handles gas from the Kazakh field.
The disruption has lowered daily output by roughly 25%–30%, from about 35,000–35,500 metric tons to around 25,000 tons.
Karachaganak Project Consortium
The Karachaganak project is operated by a consortium of major energy companies. The main partners include: Shell (29.25%), ENI SpA (NYSE:E) (29.25%), and Chevron (18%). Minority stakes are held by Russia’s Lukoil (13.5%) and Kazakhstan’s KazMunayGaz (10%).
Official Commentary
The Karachaganak consortium anticipates that production will return to normal once the Russian facility resumes operations.
Kazakhstan’s Energy Minister, Erlan Akkenzhenov, said the output reduction would have economic consequences but would not disrupt the country’s fuel supply. He expressed hope that the production restrictions would be removed within the next three days.
Chevron plans to release quarterly results on October 31, while Shell will be releasing results on October 30.
Price Action: CVX shares were trading lower by 0.14% to 154.26 at last check Tuesday. SHEL was down 0.16%.
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