Karachaganak partners sign accord with Astana on pipeline construction

Jun 20, 1999 02:00 AM

The companies developing Karachaganak, a giant gas and condensate field in north-west Kazakhstan, signed a memorandum on pipeline construction with the Kazakh government recently.
The memorandum outlines plans for construction of a pipeline from Karachaganak, which lies near Kazakhstan's border with Russia, to the Caspian Sea port of Atyrau. The Karachaganak partners will ship liquid output from the field -- i.e., gas condensate -- through the 460-km pipeline. At Atyrau, the pipeline will hook into the larger oil export link being built by the Caspian Pipeline Consortium (CPC) from the Tengiz field to the Russian Black Sea terminal of Novorossiysk.
The pipeline to Atyrau will be able to carry an initial 7 million metric tons per year, and capacity will eventually rise to 12 million metric tons per year. Kazakhstan's Foreign Ministry said in a statement that the line would allow the foreign investors to boost liquid output at Karachaganak from 3.29 million metric tons per year to 9.73 million metric tons per year.
The partners must obtain final approval from the Kazakh government before they begin implementing the project; if approval is forthcoming, construction of the pipeline could be completed by the end of 2001.

The Karachaganak group saw condensate production slip from 60,000 metric tons in 1997 to 20,000 metric tons last year due to the outbreak of financial crisis in Russia. Most of the liquids from the field are sold in Russia, and most of the group's Russian customers were unable to pay after the ruble lost value.
Karachaganak is being developed by an alliance of British Gas and Italy's Agip, which each hold a 32.5 % equity stake in the project; Texaco of the United States, with 20 %; and Russia's LUKoil, with 15 %. BG and Agip have been in on the project from the beginning, but Texaco, which bought its stake in mid-1997, is a relative newcomer. LUKoil's 15 % stake was originally reserved for Gazprom, but the Russian gas monopoly bowed out of the project in mid-1996.
Karachaganak is one of Kazakhstan's largest hydrocarbon deposits. Its recoverable reserves have been estimated at 1.33 trillion cubic meters of natural gas, 644 million tons of gas condensate and 189 million tons of crude oil.

Source: NewsBase
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