BAKU, Azerbaijan, Dec. 14
By Nargiz Sadikhova - Trend:
Kazakhstan’s government and shareholders of the Karachaganak Petroleum Operating (Shell, Eni, Chevron, Lukoil) have approved the start of the Karachaganak-1 Expansion Investment Project (A) with the aim of further maintaining the production shelf at the Karachaganak oil and gas field, Trend reports citing Kazakhstan’s Ministry of Energy.
The approval was made as a result of signing the Agreement of Completion to Settle the Dispute between the government and the shareholders.
In 2015, Kazakhstan expressed its disagreement with how the Consortium distributes profits and makes calculations. As a result of the commercial dispute, Kazakhstan appealed to the international arbitration court, as required by the terms of the Final Product Sharing Agreement.
While the arbitration process was underway, the Government and the Consortium were negotiating to find a mutually acceptable solution and resolve differences.
Thus, now that the government and the shareholders signed the agreement, the Consortium made payments to Kazakhstan in the amount of $1.3 billion. The parties also agreed on the final production sharing methodology, as a result of which Kazakhstan will receive an additional $600 million by 2037 if the oil price remains at $40-50 per barrel. The parties also agreed on the plans for Karachaganak-1 Expansion Investment Project (A) implementation.
Subsequently, the parties also envisaged the possibility of implementing the next stage of Karachaganak-1 Expansion Investment Project (A), taking into account the technical and economic parameters of the project.
At present, due to the increase in the field of Gas/Oil ratio (GOR), the existing facilities have reached the limit of gas handling. KEP has the objective to further develop the field up to the end of the FPSA period (2037) following a staged approach.
The first development stage (KEP1) will create additional value for the Contracting Companies and the RoK by optimizing stabilized liquid sales in the period beyond 2020. This will be achieved by the provision of additional, secure gas processing facilities and export/injection options to enable KPO to manage an increase in the produced GOR from the field.
Karachaganak is one of the largest oil and gas condensate fields in Kazakhstan. Karachaganak Petroleum Operating produces oil and gas from the Karachaganak field. The shares in the consortium are as follows: Eni - 29.25 percent, Royal Dutch Shell - 29.25 percent, Chevron - 18 percent, Lukoil - 13.5 percent, and KazMunayGas - 10 percent.
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