Minister: Karachaganak project's third phase may be canceled

Oil&Gas Materials 19 May 2011 19:17 (UTC +04:00)

Kazakhstan, Astana, May 19 / Trend A.Maratov /

The gas production volume at the Karachaganak field have tripled since 1999, Chris Finlayson , Executive Vice President and Managing Director, Europe and Central Asia Region of BG Group plc, said in Astana today.

"Foreign investment, introduction of new technologies and international standards promoted a threefold increase in annual production at the Karachaganak field," Finlayson said.

However, Kazakh Oil and Gas Minister Sauat Mynbayev said it is likely that the government will suspend expansion of the Karachaganak project if it does not agree with the project shareholders.

"The third phase of the development will not be conducted without agreeing. The project will be frozen," Mynbayev told journalists. "The third phase is to increase the level of fees and production levels."

Karachaganak with reserves of 1.2 billion tons of oil and condensate and more than 1.35 trillion cubic meters of gas is one of the largest operating oil and gas fields in the world. The Karachaganak field produces about 49 percent of all gas and 18 percent of all oil production in Kazakhstan.

Karachaganak Petroleum Operating (KPO) is a consortium of companies joined together to implement the Karachaganak project. The consortium includes BG Group, Eni, the share of each of which is 32.5 percent, and Chevron - 20 percent and Lukoil - 15 percent.

Disputes with companies developing the field appeared on the backdrop of attempts of Kazakhstan to obtain a share in the project. Astana first stated it in late last year. In autumn 2009, the consortium tried to get from Kazakhstan more than billion dollars paid by it for the export of oil, but suspended the claim. This year the government accused the consortium of excess oil production, the financial police launched a criminal case on the heads of the company, but then it was closed. Project participants told that they will comply with the legislation of Kazakhstan.