Status of Kazakh oil and gas projects in Dec. 2012

Kazakhstan, Astana, Dec. 25 / Trend D. Mukhtarov /

North Caspian Project

North Caspian Project envisages the implementation of the exploration programme which was carried out from 1998-2004. All exploration wells gave positive results.

The preliminary oil reserves at the fields on the results of exploration and evaluation:

Field

Geological reserves

Recoverable reserves

Kashagan

4.850 mln tons of oil

1.475.5 mln tons

Kalamkas - sea

159 mln tons of oil

57 mln tons

South-Western Kashagan

20 mln tons of condensate

6 mln tons

Aktoty

269 mln tons of condensate

100 mln tons

Kayran

150 mln tons of oil

56 mln tons

Total on North Caspian Project

5.448 mln tons

1694 mln tons

A new joint operating company, North Caspian Operating Company BV (NCOC) was established. In accordance with the new operating model, NCOC acts on behalf of seven companies and contractors as the operator evaluating and developing hydrocarbon assets of all 11 offshore blocks defined in NCPSA.

Partner-companies on "Kashagan" project: Eni, KMG Kashagan BV (a subsidiary of KazMunaiGas), Total, ExxonMobil, Royal Dutch Shell each have 16.81 percent share, ConocoPhillips - 8.4 percent, Inpex - 7.56 percent.

Project status:

An agreement was signed in late May 2012 to settle certain issues of the North-Caspian project between the Kazakh government of and the contracting companies of the North-Caspian project. According to the agreements, the parties approved an amendment to the plan and the budget of the Kashagan field development, allowing to achieve commercial production from December 2012 to June 2013. According to the Kazakh Oil and Gas Ministry, the expected date of launching Kashagan commercial production is the end of the first quarter of 2013. The second phase of the project is scheduled for 2018-2019.

The production volume will hit from 370,000 to 450,000 barrels per day in the first phase of Kashagan development. In the second phase, it will increase to one million barrels per day and reach its peak - 1.5 million barrels per day in the third phase.

The date of launching oil production at Kashagan has been postponed several times. The consortium led by Italy's Eni initially promised to ensure commercial production in 2008. While agreeing the date of transferring the commercial production, Kazakhstan increased its stake in the project from 8 to 16.8 percent and achieved royalty payments, which was not indicated in the original agreement.

Another memorandum was signed in late June 2008. According to it, the terms of commercial oil production at the Kashagan field in the Caspian Sea were postponed for 2013.

In November 2012 ConocoPhillips announced its intention to sell its stake in the Kashagan field development project to a unit of the Indian state oil company ONGC, responsible for international projects of ONGC Videsh Limited.

The deal is expected to be closed in the first half of 2013. The expected revenue will hit about $5 billion. According to the Kazakh law, the deal must be approved by the authorities.

Meanwhile, Kazakh Oil and Gas Minister Sauat Mynbayev said that the U.S. company did not officially notify the Kazakh authorities about its intention to sell its stake (8.4 percent) in the project of developing Kashagan field to Indian state oil company ONGC's branch, responsible for international projects - ONGC Videsh Limited. Moreover, Kazakhstan has a priority right to purchase this share.

According to the ONGC, as of September 30, the balance value of ConocoPhillips's assets, associated with Kashagan, was $5.5 billion.

Two new facilities: a gas processing and oil refining plants are planned to be built within the Kashagan project onshore, 35 kilometres away from the field. The excess sulphur dioxide gas which will remain after the main injection of volumes into the reservoir via a 35-kilometre pipeline will be transported for processing to the gas processing complex Bolashak.

The plant will process over 1.1 million tons of sulphur per year. The new refinery to be built within the project will be used when large amounts of oil are obtained. This processing complex will be located near the eastern part of the Bolashak plant. In total, it is planned to extract oil from 240 wells within the Kashagan project.

Tengiz

The Tengiz field is one of the largest in the world. It is being developed by Tengizchevroil.

The licensed area of the project includes the Tengiz field and smaller one Royal field with significant reserves.

Its shareholders are the KazMunayGas national company (20 per cent), Chevron Overseas (50 per cent), ExxonMobil (25 per cent) and LukArko (5 per cent).

Tengizchevroil produces several types of end products from raw materials. It is mainly stabilised oil. Dry gas, propane and butane are produced from associated gas. Moreover, sulphur, extracted from the hydrogen, is produced. The Sulphide content in the Tengiz oil is high.

As of 2010, the production volume reached 26 million tons.


Project status:

According to the Tengiz project, the so-called Project of future development is being developed with a possible increase in production from the current 26 million tons per annum to 36 million tons per year.

In 2013, it will be submitted to the Kazakh Oil and Gas Ministry for consideration. At present, the project is being considered by the shareholders of the project.

Karachaganak

Karachaganak has reserves of 1.2 billion tons of oil and condensate and over 1.35 trillion cubic metres of gas and is one of the largest oil and gas condensate fields in the world.

The main part of the extracted volume of liquid hydrocarbons is exported through the CPC pipeline system. Small volumes of Karachaganak oil are sold through the Atyrau-Samara pipeline.

The unstable gas condensate is transported towards the Orenburg gas processing plant. The volumes of unstable condensate are supplied to the Kazakh low-tonnage oil refinery Condensate.

About 40 per cent of the extracted gas is pumped into the reservoir for the partial restoration of pressure in the reservoir. The remaining volumes of raw gas are delivered to the Orenburg gas processing plant for purification and further export through the Russian pipeline system.

The purified gas is then used on the field for its own use. According to the terms of the contract, a certain volume of purified gas for local use is eenvisaged to be supplied to the Burlin district in the West Kazakh region.

At present, nearly 45 percent of all gas and 16 percent of all liquid hydrocarbons produced in Kazakhstan are extracted in "Karachaganak". In 2010, the company extracted 133.7 million barrels of oil equivalent.


The volume of extracted resources at "Karachaganak" hits 10 percent of the total estimated reserves. Since the project started on January 2012 was produced

Some 114 million tons of liquid hydrocarbons and about 136 billion cubic meters of gas have been extracted since the project implementation till Jan. 2012.

In 2011, total production volume at the field reached 12 million tons of oil and 17 billion cubic meters of gas or 6 and 9 percent more than the previous year.

Project status:

On December 14, 2011 the Karachaganak consortium developing the field and the Kazakh Oil and Gas Ministry signed an agreement for Kazakhstan to join the Karachaganak project.

After nearly two years of negotiations Kazakhstan got its 10 per cent stake in the development.

According to the BG Group, the share in the Karachaganak project after KMG's joining will be distributed as follows: BG - 29.25 per cent, Eni - 29.25 per cent, Chevron -18 per cent, LUKOIL - 13.5 per cent and KMG - 10 per cent.


According to the Kazakh Oil and Gas Ministry's forecasts, Kazakhstan will get about 3.3 - 5 billion of its stake in "Karachaganak" project during 2012-2037.

According to the ministry's forecasts, net income has reached $ 21 billion with Kazakhstan's share of about 64 percent (after deducting actually incurred costs) since Karachaganak project implementation.

"N" project ("Nursultan")

'N' block is located in the Caspian Sea, 30 kilometers south-southwest of the city of Aktau. The area is about 8,100 square kilometers. A controlling share in the subsoil contract (51 percent) belongs to "KazMunayGas" national company, the remaining stake worth 49 percent is equally owned by ConocoPhillips and "Mubadala" companies. The limited liability partnership to be established in Kazakhstan will be the operator of the project. It will be owned by all project participants in proportion to their shares in the subsoil agreement.


Status of the project

The first exploration well (R-1) was drilled in the Rakushechnoye-Sea structure. The first confirmation of the presence of hydrocarbon resources was obtained. The exploration work is conducted in full compliance with the working program. The participants of the project expect them to continue successfully. According to the state bodies' estimations, the site is highly prospective for oil and gas.

"Satpayev" project

"Satpayev" site is located in the northern part of the North Caspian shelf. It includes three promising structures: Satpayev, Satpayev Eastern, Karina. The predicted recoverable resources in "Satpayev" site hit 253 million tons of standard fuel. "KazMunayGas" and ONGC Mittal Energy signed the agreement on the principles of cooperation on the "Satpayev" project. The agreement reflects the basic principles of future cooperation between the companies within the "Satpayev" site development project in the Kazakh sector of the Caspian Sea. "Satpayev" block is being developed by KMG and the Indian national oil company "ONGC Videsh Limited" (OVL) with stakes of up to 35 percent.


Status of the project

"Satpayev" blocks are at the primary stage of exploration. Nevertheless, the significant volumes of hydrocarbon reserves are expected to be confirmed as a result of this work.

"Dead Kultuk" project

"Dead Kultuk" is located in the transition zone from shallow waters of the Caspian Sea to the territory of Komsomolets gulf and the surrounding areas on the east coast of the Caspian Sea. The area where this block is located, is one of most promising for oil and gas production in Kazakh sector of the Caspian Sea. "KazMunayGas" and "Caspian Tristar" (a group of Kazakh investors) signed an agreement to transfer 50 percent right to use subsoil in the contract for exploration and production of "Dead Kultuk" block in the Caspian Sea.


Status of the project

The exploration operations are being conducted within the project.


"Pearl" project

"Pearl" is the oil and gas project in Kazakhstan. It is located in the Kazakh sector of the North Caspian Sea, 80 kilometers north-east of the port of Bautino, Mangistau region.

The field is located in Kazakhstan's offshore zone at a water depth from 5 to 7 meters. The four promising structures include Khazar-1, Khazar-2, Auezov, Naryn and Tulpar. Major prospects of oil and gas reserves of the structure are associated with the Jurassic sediments. According to Kazakh geologists, "Pearl" project is estimated at 100 million tons of oil. "KazMunayGas" (KMG) (25 percent), Shell (55 percent) and "Oman Oil" (20 percent) work on "Pearl" site.


Status of the project

The participants of the project prepare the concept of the field development. According to the results of exploratory work, oil and gas reserves at Khazar and Auezov structures were proved.

"Zhambyl" block

"Zhambyl" block is being developed by "KazMunayTeniz" ("subsidiary" of "KazMunayGas" national company) and the Korea National Oil Corporation (27 percent).


Status of the project

"Zhambyl" block is at the initial stage of exploration. Nevertheless, the significant volumes of hydrocarbon reserves are planned to be confirmed as a result of the conducted operations.

KMG will begin exploration on the "Abai" block with the Norwegian "Statoil" in the near future, a bit later - on the blocks "Khvalynskaya" and "Central" in partnership with Russian companies, "Gazprom" and "Lukoil". The issues with the Russian state bodies are still unresolved.

KMG's plans include the partnership on Shagala and Isatay blocks with Italy's Eni. "KazMunayGas" National Company discovered the fields on the blocks "Liman" and "Urikhtau". Their supplementary exploration is underway.

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