6 Feb 2023 10:08

Kazakhstan, Lukoil sign contract on offshore Kalamkas-Sea block, investment put at $6 bln

ASTANA. Feb 6 (Interfax) - Kazakhstan's Energy Ministry and state company KazMunayGas (KMG) have signed a contract with Russian oil company Lukoil on production of hydrocarbon resources.

This is the first agreement signed under the terms of a standard contract for hydrocarbon production, the ministry said in a press release.

The contract grants resource rights to the Kalamkas-Sea/Khazar/Auezov block located in Kazakhstan's sector of the Caspian Sea, which is considered a difficult offshore project.

Lukoil "has been selected as [KMG's] strategic partner in the area of hydrocarbons," the ministry said.

The project calls for the payment of a signing bonus of $32 million, direct investment of more than $6 billion and the creation of about 2,000 jobs in the initial phase of field infrastructure construction, the ministry said.

The ministry also said that a law providing for the introduction of a new mechanism, an improved model (standard) contract, went into effect on January 10, 2023 with the aim of increasing competitiveness and creating conditions for attracting additional investment into the development of difficult projects in Kazakhstan.

KMG and Lukoil discussed cooperation on offshore exploration in Kazakhstan's sector of the Caspian, including the implementation of joint projects Zhenis and Kalamkas-Sea/Khazar in November 2022. The companies signed an additional agreement on the commercial terms of joint implementation for the Kalamkas-Sea/Khazar project in June 2022.

Kalamkas-Sea, Khazar and Auezov fields are located 60 km from shore at a depth of 7-9 meters. Production is expected to start in 2028 and total 3 million-4 million tonnes per year. The overall cost of developing the fields is estimated at about $5 billion.

Kalamkas-Sea, which was discovered in 2002, is located 120 km southwest of Kashagan and very close to the Khazar field. The combined recoverable reserves of the Kalamkas-Sea and Khazar fields are estimated at 67 million tonnes of oil and 9 billion cubic meters of gas.