Projects
BackKazakhstan Has Entered the Karachaganak Project
On December 14, 2011, in Astana, in the presence of the Prime Minister of the Republic of Kazakhstan Karim Massimov, the ceremony was held of signing the Agreement on the Settlement of Disputes between the government of the RK and the consortium Karachaganak Petroleum Operating B.V. (KPO). The share of Kazakhstan in the Karachaganak project has reached 10 %.
According to the Ministry of Oil and Gas of the RK, as a result of lengthy negotiations which were held in the period from 2009 to 2011, the Karachaganak consortium agreed to transfer in favor of the Republic of Kazakhstan a 5 % interest on the account of the settlement of disputes for the period till December 31, 2009, and also to sell an additional 5 % interest in the project at a market price, thus, achieving participation of the Republic of Kazakhstan up to 10 % and increasing the republic’s receipts from the project.
According to Ministry, the sides agreed to apply a stipulated mechanism for control of expenses which will allow Kazakhstan to increase control over the amount of expenses arising from implementation of large investment projects on the field.
As operators of Karachaganak act BG and Eni (32.5 % each in the project); 20 % belong to American Chevron and 15 % – to Russian LUKOIL. The consortium participants will reduce their shares in order to transfer 10 % to the Kazakhstan national company KazMunayGas. So, BG Group will reduce its share up to 29.25 % from the current 32.5 %, Eni - to 29.25 % from 32.5 %, Chevron – to 18 % (now 20 %) and LUKOIL – to 13.5 % (now 15 %), is indicated in BG’s message.
In turn, to maintain further mutually beneficial cooperation of the sides in running the Karachaganak project, the Republic of Kazakhstan and KPO have made some important arrangements directed at achieving maximal clearness in such issues as taxation, customs payments and reimbursement of expenses.
The Republic of Kazakhstan has confirmed stability of the contract with the Karachaganak consortium. Taking into consideration Kazakhstan’s entry the project as a participant, it agreed to allocate appropriate additional quota in the Caspian Pipeline Consortium amounting to 0.5 million tons/year with further increase up to 2 million tons/year.
The final completion of the deal depends on the fulfillment by both parties of certain conditions and is planned to occur in the first half of 2012. At the moment of the deal’s completion, on June 30, 2012, all arrangements will come into force with JSC NC KazMunayGas becoming the Karachaganak project’s member (10 %).