Kazakhstan to develop new offshore field in Caspian Sea

Jan 06, 2015 12:00 AM

By Aynur Karimova

Kazakhstan is planning to develop a new offshore field in the Kazakh sector of the Caspian Sea.

The country’s Energy Ministry told that it is jointly working with the country’s national oil and gas company KazMunaiGasto obtain a license to develop the Tsentralnoye (Central) offshore oil and gas field in the Caspian Sea.

KazMunaiGas, and Russia’s Gazprom and Lukoil companies are the authorized organizations in charge of the development of the Tsentralnoye project.

A supplementary exploration is set to be conducted on the Tsentralnoye field to minimize the geological risks.

In 2013, KazMunaiGas and TsentrKaspneftegaz, the shareholders of which are Lukoil and Gazprom, established a joint venture that should obtain an exploration and production license to hold a supplementary exploration.

However, in order to obtain the license, it is necessary to amend the agreement between Russia and Kazakhstan signed back on July 6, 1998, as this document stipulates the conclusion of a production sharing agreement (PSA).

Kazakhstan’s Energy Ministry, together with KazMunaiGas, is working to prepare the needed package of documents for signing a draft protocol on amending the mentioned agreement concerning the Tsentralnoye field’s development.

The ministry is also working to coordinate the package with the Kazakh government bodies.

The coordination of the draft protocol on amending the mentioned agreement was completed by the Russian government bodies in September 2014.

In 2002, Kazakhstan and Russia drew boundaries between their sectors in the Caspian Sea, and set three border structures, namely, Kurmangazy, Khvalynsk and Tsentralnoye.

Khvalynsk Project

The ministry also noted Kazakh and Russian energy ministries jointly with authorized organizations are working hard to reach agreement on the draft protocol for making amendments to the agreement on Khvalynsk project.

The agreement was signed between the two countries back on July 6, 1998.

“Following this, the two sides are expected to sign a production sharing agreement (PSA) for subsoil use of Khvalynsk oil and gas condensate field,” the ministry said.

The ministry also said an interagency commission was established in Russia in April 2011 to define the conditions for the subsoil use and to work out the draft PSA.

Negotiations on the PSA terms on Khvalynsk field have also been held with government bodies in Russia since 2011.

“Currently, the issue of achieving acceptable cost efficiency by KazMunaiGas and Lukoil is being studied,” the ministry said.

The Khvalynsk project is being implemented in accordance with the protocol dated May 13, 2002 under the Kazakh-Russian agreement on the delimitation of the northern part of the Caspian Sea to exercise sovereign rights for subsoil use. The agreement was signed on July 6, 1998.

The reserve of Khvalynsk is estimated at 332 billion cubic meters of natural gas, 17 million metric tons of gas condensate and 36 million metric tons of oil. Around $1 billion worth of investments are needed for the development of this field.

Kashagan field

The ministry went on adding that the final report on the causes of leakage in the pipelines at Kazakhstan’s Kashagan oil and gas field will be ready in 2015.

“Currently, an investigation is going on into the causes of the pipelines’ failure is in the final stage,” said the ministry. “The final report on the investigation will be made public by the operator of the North Caspian project in 2015.”

The recoverable oil reserves of Kashagan field are estimated at 11 billion barrels, whereas the total geological raw material reserves stand at 35 billion barrels. Besides, natural gas reserves are estimated at over 1 trillion cubic meters.

Production at Kashagan field was completely suspended in September 2013 after leaks were detected in the sulfur dioxide gas and oil pipelines of the field after starting the production.

The ministry also noted it plans to resume the production at Kashagan in late 2016.

“The work on North Caspian Project for 2014-2015 mainly includes replacement of pipelines and completion of the construction and pre-commissioning works,” the ministry said.

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