Ministry of energy to grant KazMunaiGaz with the right for exploration and production hydrocarbons on the field mertvyi kutluk at Caspian Sea

/INTERFAX-KAZAKHSTAN, Astana, July 11, 2008/ - The Ministry of Energy and Mineral Resources of Kazakhstan and national oil and gas company KazMunaiGaz (KMG) have signed the agreement on Friday for exploration and production of hydrocarbon raw on the field Mertvyi Kutluk. As per the information from the correspondent of Interfax-Kazakhstan agency the document was signed by Executive Secretary of the Ministry of Energy Askar Batalov and the President of KazMunaiGaz Serik Burkitbayev. The indicated field is located in the Kazakhstan sector of Caspian Sea. As it is stated in the information press-release of KazMunaiGaz, "after obtaining the permission by the national company (for exploration and production of hydrocarbons - "IF-K"), in accordance with the legislation of the republic 50% share in agreement is planned to be transferred to a legal entity, which will be formed by the group of investors from Kazakhstan. As Mr. A. Batalov informed on the press-briefing after the signing of the document, nowadays the consortium of the big private Kazakhstani banks and several national companies is formed. "They are now consolidating to the consortium, and as soon as the whole procedure will be finished the next stage will be the signing the agreement specifically with this consortium. Which means that on the second stage KazMunaiGaz will transfer them right for subsoil use, and they will develop the project 50 by 50" - said Mr. Batalov. In turn Mr. S Burkitbayev has informed on this press-briefing that currently "in process the last congruence on participation and volume of financing, which will provide guarantees for this investment consortium". "As soon as it will be formed, we will conduct meetings, and after the approval from Ministry of Energy and Mineral Resources we will start works" - said Mr. S. Burkitbayev. He also has underlined that the concluding the agreement - "is the evolutionary process". "If to remember when the board of foreign investors at the head of the state was formed, then at that time there were no even mentions about national investors (to the local economy - "IF-K"). Now Kazakhstan business, we believe, substantially strengthened. It shows of not only in the state but also transfers extra investment resources to other states, taking this into consideration, I think, the decision was made by government of the state to give a chance to Kazakhstani investors take part in the real, significant and serious infrastructure project" - said Burkitbayev. "The realization of the project is assumed annual financing of social projects in the Caspian region of Kazakhstan to the volume of $100 thousand within the period of exploration and $200 thousand within the period of production" - stated in the press-release. "Additionally it is planned to allocate $100 thousand for professional trainings of Kazakhstan personnel within first four years of the project and $200 thousand in following years" - stated in the press-release. The area of licensed field Mertvyi Kutluk is 7273 square kilometers, depth of water in the region of works - from 1 to 2.5 meters. Extracted oil resources based on the category C-3 is estimated in 164 million tones. Planned oil operations at the first stage include conduction of geophysical, engineer-geological works, drilling two exploration oil wells. The project provisions the realization of "zero disposal" principle. Earlier it was informed that in the late 1990s - early 2000s works on Mertvyi Kutlik was performed by Oryx Kazakhstan Energy Company, which in 1999 was merged with American oil company Kerr-McGee. The corresponding license was obtained by the company in 1994. In 1998 the first exploration drilling of the oil well on Mertvyi Kutlug was performed. However in 2003 Kerr-McGee have sold its assets in Kazakhstan to companies constituent to English-Dutch concern Royal Dutch/Shell for $165 million including 100% share on the field Mertvyi Kutlug. It was never officially informed what was happening later with this oil field. [2008-07-11]