KazMunaiGas to present concept for implementing third phase of Karachaganak development

Astana, Kazakhstan, March 5
By Daniyar Mukhtarov - Trend:

Kazakhstan's national oil and gas company KazMunaiGas, sees no obstacles for the implementation of the third phase of development of the Kazakh Karachaganak field, Chairman of the Board of KazMunaiGas, Sayat Mynbayev said on March 4 at a briefing at the Central Communications Service under the president of Kazakhstan.

"The decision on implementation of the third phase at Karachaganak has already been adopted. All parties to the project are interested in the implementation of the project's third phase. Both the shareholders and the republic long ago gave the go-ahead to work out the concept of the third phase," Mynbayev said.

KazMunaiGas which has a 10 percent share in the project will present its concept of the third phase of the field's development, according to Mynbayev.

"The configuration of the third phase is as follows. The consortium began to produce 11 million tons long ago and if the third phase is not implemented, then the oil production will decrease. In order to prevent the decrease in liquid hydrocarbon production, it is supposed to produce more gas and accordingly to pump more," Mynbayev said.

Currently, some 17 billion cubic meters of gas is produced at Karachaganak, according to the head of the national company's board. Production can reach 40 billion cubic meters of gas and re-pumping will also increase significantly.

"This will allow it to keep the level of liquid hydrocarbon production for 12-13 years. This is a classical scheme where in the first instance, liquid hydrocarbons are extracted though re-pumping gas into the reservoir. This period will last until 2028-2029,"

The major part of the produced gas will be re-pumped into the reservoir and the remaining part in the volume of eight billion cubic meters will be delivered to the Orenburg Gas Processing Plant (GPP) in Russia.

Today, both Russia as represented by Gazprom and Kazakhstan are interested in delivering Karachaganak gas to the Orenburg gas processing plant. The sale and purchase agreement for gas has been extended until 2020, but the investment decision should be adopted now, the head of KazMunaiGas board said.

Kazakhstan delivers 800,000 tons of liquid condensate to Russia together with gas and the price for the condensate is inconvenient for Kazakhstan, as it is lower than when selling gas condensate through the Atyrau-Samara and Caspian Pipeline Consortium (CPC) systems, according to Mynbayev.

"Our first condition is that the price for the condensate should not be linked with the price of gas. Our second condition is there should be a clear tariff for reprocessing our gas. It should not 'bounce' in the long run. And thirdly, all the reprocessed gas must return back to Kazakhstan. We do not see any obstacles from Russia, at least in a preliminary stage and therefore, we see no major obstacles to the implementation of the third phase of expansion of Karachaganak," Mynbayev said.

The Karachaganak field, opened in 1979, is one of the largest gas condensate fields in the world. It is located in north-western Kazakhstan and covers an area of over 280 square kilometres. Its estimated initial reserves of hydrocarbons are nine billion barrels of condensate and 48 trillion cubic feet of gas and the total estimated reserves exceed 2.4 billion barrels of condensate and 16 trillion cubic feet of gas.

The consortium for the development of the field includes five oil and gas companies.

These are BG group (29.25 percent), Eni (29.25 percent), Chevron (18 percent), LUKOIL (13.5 percent) and KazMunaiGas (10 percent). In 1997, the joint venture partners and authorised body representing the government of Kazakhstan founded the company in order to develop the Karachaganak field.

The field is the largest gas producer in Kazakhstan and accounts for 45 percent of the total gas production in the country, as well as 16 percent of the total production of liquid hydrocarbons.

Translated by L.Z.

Edited by S.M.

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