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    Lukoil Farms into Kazakh Offshore Block


It is to partner state-owned KMG exploring the Zhenis block.

by: Dalga Khatinoglu

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Natural Gas & LNG News, Europe, Corporate, Exploration & Production, Caspian Focus, News By Country, Kazakhstan, Russia

Lukoil Farms into Kazakh Offshore Block

Russian independent Lukoil has farmed into KazMunayGas’s Zhenis block in the Kazakh sector of the Caspian sea, the companies said Dec.4.

The block is 80km offshore the port of Aktau and has water depths of between 75 and 100 meters. The two companies will jointly fund its exploration during 2019. Their statements did not divulge expected spending or equity shares. In 2010, however, KMG gave a preliminary estimate of the Zhenis block’s resources as 615mn metric tons of oil equivalent. 

Lukoil CEO Vagit Alekperov however said June 2018 that Lukoil plans to invest $270mn in Zhenis block, including $60mn on drilling a well and seismic work.  It has been active in Kazakhstan since 1995 and is a partner in major onshore oil and gas developments there including the Tengiz, Karachaganak and Kumkol fields, plus exploring and appraising the Kazakh Tsentralnoye offshore field. It is also the only Russian company that produces oil and gas in the Russian part of the Caspian Sea and has a 10% stake in Azerbaijan’s offshore Shah Deniz field.

KMG said late November that its net profit for the first nine months of this year was 648 bln tenge ($1.927bn), up 43% year on year. Gas exports to China, which began October 2017, boosted the value of KMG’s gas sales value in 9M2018 to 405 bln tenge ($1.2bn). The state firm’s oil and gas production volume increased slightly to 17.642mn metric tons and 6.067bn m3 respectively.

Two fields accounted for 80% of Kazakh gross gas output in 2017:  Karachaganak (49%) and Tengiz (31%). Karachaganak gas is sold cheaply to Gazprom for processing in Orenburg in southern Russia, but the bulk of its value comes from condensate exports - just as the bulk of Tengiz's revenue comes from its oil production.