New operator of Kazakh Kashagan field announced

Kazakhstan Materials 12 September 2014 14:50 (UTC +04:00)

Astana, Kazakhstan, Sept. 11

By Daniyar Mukhtarov - Trend:

North Caspian Joint Venture (NCJV) will be a new operator of the North-Caspian project in the Kashagan field. It will replace North Caspian Operating Company.

"NCJV will replace NCOC which is the current operator at Kashagan," he said. "Legal procedures for NCJV registration began in June 2014."

"The name of North Caspian Joint Venture company testifies to new approaches to the investors' risk assessment," according to the statement.

"The most important thing is the term venture," according to the statement. "Using this term means a radical change in the financing scheme of the project, turning the operating structure into self-financing and independent attracting of investments through venture capital foundations."

"The investors' funds will refer to the category with a high degree of risk and will be considered as long-term," according to the statement.

The new operator NCJV is initially established as a company, where a few employees will work. The current staff of the current operator will be reduced three-four-fold.

"Stephen DeMayo (representative of the U.S. ExxonMobil company) heads the new operator and Kazakh representative Jakyp Marabayev became his deputy. The employees that will continue their work in the new company, will move from Astana to Atyrau," the source said.

"A small staff will remain in Astana, as there is less to do for eliminating the failures of Phase-1".

NCOC said in June that the participants of the international consortium, engaged in the development of Kashagan, agreed on a gradual transition from the current operating model to a single consolidated joint venture. Because the transition of the Kashagan project from the development stage to the production stage will require further integration and consolidation of activities of operators and agents to prepare the consortium for the further development of resources under the North Caspian Project.

"The single consolidated joint venture will use the achievements of NCOC and agents in the sphere of development, drilling and operation," NCOC said.

It was also reported that the process of integration and the merger will begin this year.

Changes in the PSA and (or) the ownership structure of the Production Sharing Agreement (PSA) in the North Caspian Sea are not forecasted due to the planned transition to the new model, the report says.

Earlier it was reported that Stephen de Mayo, a company ExxonMobil spokesman, succeeded Pierre Offan as NCOC Managing Director since May 2014.

NCOC was established in October 2008. That time Kazakhstan reached an agreement with seven companies involved in the North-Caspian project (Kashagan) on establishment of a new joint operating company - North Caspian Operating Company B.V.

In January 2009, NCOC officially became the operator of the Production Sharing Agreement for the North Caspian Sea, taking on responsibilities that were previously handled by AGIP KCO.

The following companies participate in the project: KazMunaiGas (KMG), Eni, ExxonMobil, Royal Dutch Shell, Total, Inpex and CNPC.

The geological reserves of Kashagan are estimated at 4.8 billion metric tons of oil. The total oil reserves amount to 38 billion barrels, some 10 billion of these are recoverable reserves. There are large natural gas reserves at the Kashagan field - over 1 trillion cubic meters. The total volume of investments in the project is currently equal to $50 billion.

Edited by CN