Kazakhstan is ready to pay $700 million - 1.1 billion for a stake in Karachaganak

Kazakhstan is ready to pay $700 million- 1.1 billon for a stake in Karachaganak condensed gas field development project, Interfax - Kazakhstan reports, citing Timur Kulibayev, Chairman of Smaruk – Kazyna Sovereign Wealth Fund. Kazakhstan first announced its intention to purchase a stake in the project in 2009. This announcement followed an argument with the project shareholders over oil export duties introduced by the government. The legal claims were withdrawn and the parties started negotiating. After a long-lasting taxation argument the consortium agreed to give Kazakhstan a 10 % in the project. The plan was to complete negotiations this fall. With its 1.2 billion tons of oil and condensed gas and 1.35 trillion cubic meters of gas, Karachaganak is one of the largest O&G fields in the world. Karachagank accounts for 49% of all the gas production and 18% of oil production in Kazakhstan. Karachaganak Petroleum Operating (KPO) is a consortium of companies to develop Karachaganak oilfield. The consortium includes BG Group, Eni (32.5% each), Chevron (20%) and LUKOIL (15%). KPO operates in accordance with a PSA signed with the Kazakh Government in November 1997. According to the PSA, the consortium shall be operating the project up to 2038. Mid-June Tengrinews.kz had reported that Kazakhstan’s Government and Karachaganak Petroleum Operating (KPO) had reached a preliminary agreement for Kazakhstan to purchase 10% in Karachaganak project. According to a source close to the situation, “All the participants have agreed to Kazakhstan’s purchasing 10%: 5% on a free of charge basis, with the other 5% at the market value”, the source said. Earlier it was reported that Kazakhstan’s share in the profits from Karachaganak oilfield developed by Karachaganak Petroleum Operating (KPO) stands at 20%, according to Minister of Oil and Gas Sauat Mynbayev.