Lukoil shutting down two projects in Kazakh sector of Caspian Sea
ASTANA. Aug 18 (Interfax) - The operator of Lukoil's upstream projects abroad, Lukoil Overseas, is shutting down two projects in the Kazakh sector of the Caspian Sea after geological exploration failed to find commercial reserves of hydrocarbons, the head of the company's affiliate in Astana, Andrei Kirillov, said.
"Lukoil Overseas is participating jointly with partners in three geological exploration projects on the Caspian Sea shelf. With regard to the Atashsky and Tyub-Karagan projects, our calculations and expectations were not confirmed and these projects are now in the shutdown stage," Kirillov told the in-house publication Neftyanye Vedomosti.
All commercial and social commitments under the projects have been met, he said.
A drilling contractor is currently being selected for the third license section, Zhambai Yuzhny-Yuzhnoye Zaburunye, he said. "The process has been delayed in connection with the difficult operating conditions at that shallow-water section, and also due to the lack of appropriate drilling equipment in the region," he said.
"The overall geological exploration operations in the Caspian have not produced the expected results and we have not made any commercial discoveries," he said.
Work at the Atashsky section was performed by Atash, a joint venture between KazMunayGas (KMG) subsidiary KazMunayTeniz and Lukoil Overseas Atash. Under the terms of the contract, Lukoil bore all of the project costs in the geological exploration phase.
It was reported earlier that Lukoil was considering extending the license to Atashsky, which was set to expire in December 2010. It proposed further study of the block, with a decision on drilling to depend on the result of the N2 exploration well at the adjacent Tyub-Karagan section. However, the Kazakh government rejected the proposal after which KazMunayTeniz and Lukoil Overseas decided to shut down the project.
Tyub-Karagan Operating Company is a joint venture between KazMunayTeniz and Lukoil Overseas Shelf. The first exploration well drilled at Tyub-Karagan failed to find commercial hydrocarbon reserves.
A second exploration well recently completed at the section, drilled to a depth of 2,150 meters, also came up dry.
Kazakh Oil and Gas Minister Sauat Mynbayev has said work on the project will continue.
Zhambai LLC was formed in 1999 to carry out exploration and production at Zhambai Yuzhny-Yuzhnoye Zaburunye. The joint venture is owned by KazMunayTeniz, Caspian Investments (a joint venture between Lukoil Overseas and Sinopec) and a subsidiary of Repsol.
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