North Caspian oil agreement signed

Nov 18, 1997 01:00 AM

A multi-national consortium signed a major offshore oil and gas agreement with the Republic of Kazakhstan. The agreement grants the member companies -- Agip, BG plc, British Petroleum, KazakhstanCaspishelf, Mobil, Shell, Statoil and TOTAL -- the rights to acreage in the offshore area of the North Caspian Sea on the basis of a Production Sharing Agreement (PSA).
Under the PSA, several exploration wells will be drilled and a limited amount of additional seismic data will be acquired. The acreage covers approximately 6,000 sq km of the North Caspian Sea. Should the project be successful, each company will recover its costs and its share of profits from the oil discovered.
Mobil's Lucio A. Noto said, "This agreement marks another very significant opportunity for Mobil in its growing partnership with the Republic of Kazakhstan as it develops its vast energy resources for the future. Complementing our interest in this project, we have a strong position in the Tengiz joint venture and expect increased earnings and production for Mobil as it develops. Our participation in these and other exploration, transportation and marketing ventures provide a sound base for Mobil's future growth in Kazakhstan."
This agreement confirms and further details the rights granted under a previous agreement signed in December 1993 under which the foreign companies agreed to fund an extensive offshore seismic survey of the Kazakh offshore.
This survey was completed in May 1997. The PSA provides the basis for moving on to the exploration drilling phase and eventual development and production of any commercial discoveries.
Although no wells have yet been drilled in the North Caspian, the recently completed seismic survey and large nearby onshore discoveries such as Tengiz confirm that the offshore area is highly prospective. The first well is planned for 1998.
Located on the eastern shore of the Caspian Sea, Tengiz is one of the world's largest oil fields with reserves estimated in excess of 6 billion barrels.
Capacity, currently 165,000 bpd, is expected to be expanded with the completion of the debottlenecking of the process trains which is under way. By the first quarter of 1998, capacity will be 185,000 bpd with additional substantial increases to production planned for the future.

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