Kazakh state oil firm to invest $1 bln in Kashagan

/REUTERS, Astana, Raushan Nurshayeva, May 4, 05/ - Kazakhstan's state oil and gas firm KazMunaiGas said on Wednesday it expected to invest about $1 billion in developing the giant Kashagan oilfield in the Caspian Sea until it comes on stream in 2008. The company bought 8.33 percent in the Eni-led international consortium developing the field as part of long negotiations for Britain's BG to sell its 16.67 percent stake to other consortium members. "We'll spend about $1 billion, that's $250 million every year until 2008 in capital and maintenance costs," Nurlan Rakhmetov, KazMunaiGas director for finance and economics, said at a ceremony marking the completion of the BG stake sale. While oil prices remained high the company would not need to borrow to fund Kashagan development, he said, but added it might seek financing if there were a sudden drop in crude prices. Speaking at the same ceremony, Kazakhstan's Energy and Natural Resources Minister Vladimir Shkolnik said the Kashagan consortium could use the new Baku-Tbilisi-Ceyhan (BTC) pipeline to transport oil, but it would be a decision for the companies. "You know there are various possible routes, including BTC, and including some volumes that could be taken by the (existing) CPC pipeline (through Russia)," Shkolnik said. Last month, the head of Azerbaijan's state oil firm, Natik Aliyev, said Kazakhstan planned to transport half a million barrels of oil per day through BTC in 2010 and this would later rise to 1 million bpd -- plans that would involve an expansion of the BTC pipeline, which has yet to start carrying crude. The Kashagan field, one of the biggest discoveries in decades, is a key part of Kazakhstan's plans to triple oil production by 2015 and join the world's top 10 producers. BG received around $1.8 billion from the sale of its stake in the North Caspian Sea Production Sharing Agreement to partners Eni, ExxonMobil, Royal Dutch Shell, Total and ConocoPhillips. The partners subsequently sold on half of the BG stake to KazMunaiGas as part of a deal brokered to end months of deadlock after the government said it had a right to join the consortium as ultimate owner of the Central Asian state's resources. Japan's Inpex, also a member of the consortium, did not take part in the BG stake sale. ((Reporting by Raushan Nurshayeva; Reuters Messaging: michael.steen.reuters.com@reuters.net, almaty.newsroom@reuters.com; +7 3272 508 500)) [2005-05-04]