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Kazakh Energy Ministry talks oil production at Karachaganak field (Exclusive)

Oil&Gas Materials 10 October 2018 17:12 (UTC +04:00)

Baku, Azerbaijan, Oct. 10

By Rashid Shirinov – Trend:

As many as 9.1 million tons of oil was produced at the Karachaganak oil and gas condensate field in the three quarters of this year, Kazakh Vice Minister of Energy Magzum Mirzagaliyev told Trend.

The expected oil production by the end of this year is about 12 million tons, he added.

"Given the issues related to the settlement of the dispute with the Karachaganak consortium [Karachaganak Petroleum Operating] on the objectivity index, which will be achieved by the end of 2018, production forecast can be further adjusted," Mirzagaliev said.

The vice minister also noted that the production at the Karachaganak consortium, which produces oil at the field, accounts for about 14 percent of the total oil production in Kazakhstan.

The shares in the consortium are as follows: Eni - 29.25 percent, Royal Dutch Shell PLC - 29.25 percent, Chevron - 18 percent, Lukoil - 13.5 percent and KazMunaiGas - 10 percent.

Karachaganak is one of the largest oil and gas condensate fields in Kazakhstan. Oil production at the field amounted to 12.4 million tons in 2017 according to the Kazakh Information and Analytical Center of Oil and Gas.

In early October, the government of Kazakhstan and the shareholders of the Karachaganak project agreed on the method of sharing oil revenues. The parties signed an agreement on principles, which enshrines the main terms of settlement.

According to the principles, the consortium will pay Kazakhstan a compensation of $1.111 billion. Changes will be made to the mechanism of production sharing, which will provide the country with additional revenues of about $415 million until 2037 at an oil price of $80 per barrel.

The consortium will also provide Kazakhstan with a 10-year loan for an infrastructure project or pay an equivalent value of the loan in the amount of about $200 million.

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