KMG 2011 output to be hit worse than expected

ALMATY, Aug 8 (Reuters) – KazMunaiGas Exploration Production (KMGq.L: Quote), Kazakhstan’s No. 2 oil producer, said on Monday it can see a workers’ strike cutting its output cut by some 800,000 tonnes, or 6 percent of its consolidated production in 2011.

“Oil exports can decrease by an average of around 120,000 tonnes a month until a normal production process is restored,” the company said in written answers to questions by Reuters.

The effect of the strike, which started at the end of May at the company’s Uzen field in western Kazakhstan, now appears to be greater than originally thought. KMG EP said in late June it expects to fall 4 percent of its planned 2011 output of 13.5 million tonnes.

London-traded KMG EP, majority owned by Kazakh state oil and gas firm KazMunaiGas , said on Monday that during the two months ending July 27 its actual output had fallen by a total of 366,000 tonnes short of target.

“In its turn, this had a negative impact on oil exports, leading to a shortfall in crude shipments abroad of around 120,000 tonnes in July,” the company said.

Industry sources said on Aug. 4 that Kazakhstan, Central Asia’s No. 1 oil producer and largest economy, would ship 235,000 tonnes of crude oil less than planned via Russia in the third quarter because of the ongoing strike.

Labour disputes are relatively rare in Kazakhstan, which holds about 3 percent of the world’s recoverable oil reserves and where veteran leader Nursultan Nazarbayev tolerates little dissent.

KazMunaiGas workers complain of a new system of payment which has actually cut their wages. Their managers deny this.

“The majority of workers come to work, the production process has not stopped,” KMG EP said. “The number of those not showing up at work comprises between 12 and 15 percent of each shift, or around 500-700 people,” it said.

More than 400 workers on strike have been fired, it said.

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