Russia and Kazakhstan sign agreement on refining and sale of gas

Jul 18, 2006 02:00 AM

The presidents of Russia and Kazakhstan agreed at the Group of Eight summit to create a joint venture to process natural gas from Kazakhstan's giant Karachaganak gas field.
Under the terms of the deal, both countries would have an equal share in the venture, which will expand the capacity of the Soviet-built Orenburg refinery.

Russian President Vladimir Putin called the project -- which envisages an annual output of at least 15 bn cm -- a "humble but important" contribution to energy security, the central theme of Russia's G8 presidency.
"We are entering a very important alliance," Kazakh President Nursultan Nazarbayev said. "It is a major step forward."

The deal comes as competition for Kazakhstan's energy resources intensifies. US Vice President Dick Cheney paid a high-profile visit to the country in May to lobby for American energy interests.
European Union Energy Commissioner Andris Piebalgs also travelled to the Kazakh capital, Astana, in May to discuss the possibility of a Europe-bound gas pipeline that could skirt Russia.

The Karachaganak field is one of the crown jewels of Kazakhstan's hydrocarbon riches. Located 150 km (90 miles) east of the city of Uralsk, it contains 1.3 tcm of gas and 1.2 bn tons of liquid condensates and oil.
The field is operated by an international consortium led by Britain's BG Group and Italy's ENI, each with a 32.5 % stake. Russia's biggest oil producer, LUKoil, has a 15- % stake while US oil giant Chevron holds 20 %.

Source: MosNews
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