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    Lukoil Signs Kazakh offshore Zhenis contract


Russian independent Lukoil signed a contract with Kazakh energy ministry to study and develop the Zhenis block in the Caspian Sea, the company...

by: Dalga Khatinoglu

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Natural Gas & LNG News, Asia/Oceania, Corporate, Exploration & Production, Investments, Political, Ministries, News By Country, Kazakhstan

Lukoil Signs Kazakh offshore Zhenis contract

Russian independent Lukoil signed a contract with Kazakh energy ministry to study and develop the Zhenis block in the Caspian Sea, the company announced April 4. It has formed a 50-50 joint venture Zhenis Operating Co with state oil and gas monopoly KazMunaiGaz (KMG) to operate the project.

The commitment requirement includes drilling one exploration well and conducting a 3D seismic survey, which will cost about $120mn based on remarks by Lukoil CEO Vagit Alekperov, who said last June that Lukoil plans to invest $270mn in Zhenis block, including $60mn on drilling a well and seismic work.

Lukoil has been active in Kazakhstan since 1995 and is a partner in major onshore oil and gas developments there. These include the Tengiz, Karachaganak and Kumkol fields, plus exploring and appraising the Kazakh Tsentralnoye offshore field.

Lukoil’s total hydrocarbon production in international projects was about 105mn boe in 2017 of which a third came from Kazakhstan. It is also a big gas producer in Uzbekistan.

It is also the only Russian company to produce oil and gas in the Russian part of the Caspian Sea and has a 10% stake in Azerbaijan’s offshore Shah Deniz field.

Lukoil produced 33.54bn m3 gas in 2018, of which 17.7bn m3 came from domestic fields, 13.42bn m3 from Uzbekistan and only 1.76bn m3 from other sources, including Kazakhstan.

It operates the Russian Caspian fields Filanovsky and Korchagin, which together produced 2mn mt of oil and 1.2bn m3 of associated gas in 2016, according to the latest available gas statistics. The 2018 statistics show a big jump in oil production, without mentioning gas output level. The fields produced 6.91mn mt together last year, Lukoil announced April 2, adding that it has completed seventh well in Filanovsky and third well at Korchagin in 2019.

The latest statistics, released by Kazakhstan say the country’s gross gas production (including re-injection and flaring) increased by 5.52% year-on-year in January-February to above 9.7bn m3, without elaborating commercial gas volume. However, Kazakhstan’s gross gas production in 2018 stood at 55.5bn m3, of which 60% was commercial.

The details of statistics show its dry gas production declined 1.5% during January-February to 3.866bn m3, but associated gas output increased by 10.57% to 5.85bn m3, the national statistics committee said.