Minister: Kazakhstan considers minimising supplies to the Orenburg gas processing plant

Oil&Gas Materials 28 January 2013 15:55

Kazakhstan, Astana, Jan. 28 / Trend D. Mukhtarov /

Kazakhstan is interested in minimising supplies to the Orenburg gas processing plant in Russia from the Karachaganak field because of unattractive prices, Oil and Gas Minister Sauat Mynbayev said at an expanded meeting of the ministry on Monday.

At the same time Mynbayev said that Kazakhstan and Russia continue to discuss gas supplies from Karachaganak to the Orenburg gas processing plant in 2013.

Previously, KazMunaiGas reported plans on the construction of a gas processing plant in Karachaganak till 2021 with a capacity of up to five billion cubic meters of gas a year carried out over three stages. Oil and gas minister Sauat Minbayev has reported possibilities of a reduction of Karachaganak gas condensate sale volumes to Orenburg. He named the low prices offered by Orenburg as being the reason.

Realisation of Karachaganak's first and second development stages in 1990 and the beginning of 2000 enabled an increase of the field's potential and export of liquid hydrocarbons via the Caspian Pipeline Consortium pipeline. Karachaganak Petroleum Operating (KPO) has extracted over 12 million tons of liquid hydrocarbons and some 17 billion cubic meters of gas in Karacaganak which exceeds the indicators of 2010 by six and nine per cent respectively.

Although the Kazakh government was planning to realise the third stage just after the previous stages of project development, foreign participants of the KPO consortium - British BG Group and Italian Eni, American Chevron and Russian Lukoil, which have already contributed billions of investments to the field, weren't planning on it.

Later the Kazakh government stated that it will approve the third stage of the Karachaganak project only under conditions of acquiring shareholder rights. Following lengthy negotiations this summer, Kazakhstan, represented by the KazMunaiGas national holding became a contractor of the Karachaganak project with a 10 per cent share

The shares were allocated as follows: 29.25 per cent for British BG Group and Italian Eni, 18 per cent for American Chevron and 13.5 per cent for Russian Lukoil and 10 per cent for Kazakhstan.

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 major oil and gas fields in the world.