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KPO to Invest $1.1 bln to Boost Oil Output

Friday 14 September 2018

ASTANA (Interfax-Kazakhstan) — Karachaganak Petroleum Operating (KPO) will invest $1.1 bln in a gas debottlenecking project that will enable the company to maintain the maximum level of output, the Kazakh Energy Ministry says in a press release.

Karachaganak Field is a gas condensate field located about 23 km east of Aksai in the northwest of Kazakhstan. It is estimated to contain 1.2 tln m³ of gas and one billion tonnes of liquid condensate and crude oil. Discovered in 1979, it began production under Karachaganckgazprom, a subsidiary of Gazprom.

Kazakhgas took over operatorship after the independence of Kazakhstan in 1992. In 1992, AGIP (now Eni) and the then British Gas (who became BG Group, and later acquired by Royal Dutch Shell) were awarded the sole negotiating rights, forming a partnership company. In 1997, Texaco (now Chevron Corporation) and Lukoil signed a production sharing agreement with the original two companies and the Kazakhstan Government. This is a 40-year agreement to develop the field to allow the production to reach world markets. This is done under a partnership company known as Karachaganak Petroleum Operating (KPO) where Royal Dutch Shell and ENI are joint operators with a 29.25% stake each in the company, with Chevron and Lukoil owning 18% and 13.5% respectively.

In September 2009 the KPO filed an arbitration case against Kazakhstan. President Nursultan Nazarbayev appointed Maksat Idenov to lead the negotiations, after which the arbitration was suspended[3] towards an amicable settlement of the dispute and KazMunayGas engaged in entrance into the project in 2010. Under the terms of an agreement reached on December 14, 2011, the Republic of Kazakhstan has acquired through KazMunayGas a 10% stake for $2 bln cash and $1 bln non-cash consideration.

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