Kazakhstan: KazMunaiGas Signs Rumoured Karachaganak Deal
A rumoured gas deal between Kazakhstani gas company KazMunaiGas and the consortium of companies involved in the Karachaganak gas field has gone ahead, it was announced today.
BG Group, the company that is the joint operator of the project with Italian company Eni, says that KazMunai Gas will take a 10 per cent interest in the fields, reducing the stakes of all four companies involved in the field.
BG Group and Eni will both reduce their stakes from 32.5 per cent to 29.25 per cent. Chevron will reduce its stake from 20 per cent to 18 per cent with LUKOIL reducing its stake from 15 per cent to 13.5 per cent.
Pre-tax, the agreement between the Republic of Kazakhstan and the four other companies amounts to $3 billion. A $1.5 billion pre-tax consideration will take 5 per cent of the field. The remaining 5 per cent stake will be sold for a further $1.5 billion, with $500 million given in cash and $1 billion in non-cash consideration.
"The non-cash consideration includes final and irrevocable settlement of cost recovery and other related claims and the allocation of an additional 2 million tonnes per annum capacity for the Karachaganak project in the Caspian Pipeline Consortium export pipeline," a statement for BG Group said.
The deal will see the contracting companies pay an initial $1 billion in tax and loaning a further $1 billion to KazMunaiGas to be repaid in installments over three years, to be paid from the sales of any oil or gas found in the 10 per cent stake KazMunaiGas will now hold.
"BG Group looks forward to working with KMG as a partner in the Karachaganak project, one of the world's largest gas and condensate fields," BG Group Chief Executive, Sir Frank Chapman said. "This agreement represents an excellent outcome for the project partners as well as for the government and people of Kazakhstan."
"Karachaganak is estimated to have hydrocarbons initially in place of 9 billion barrels of condensate and 48 trillion cubic feet of gas - to date less than 10 per cent of that resource has been produced," BG Group Executive Vice President Ashley Almanza added. "Today's agreement ensures strong alignment with the Republic of Kazakhstan and provides the foundation for realising the vast remaining potential and value in Karachaganak."