New contract to be signed on Central field

Development of the Central oil and gas field on the North Caspian shelf could finally move from the dead point.

This week Russia and Kazakhstan plan to find an agreement on revision of the intergovernmental agreement, which will allow Kazmunaigas, Gasprom and LUKoil to obtain a new license for exploration and production, lack of which has slowed down the project in the past five years. But with the low oil prices, oil extraction on the field could start only after 2020.

Vladimir Putin and Kazakhstan President Nursultan Nazarbayev will sign the document to amend the agreement on division of the north Caspian Sea bowels of earth of 1998, said Assistant of Russian President Yurii Ushakov. Putin will visit Kazakhstan on October 15, 2015. “The document regulates the issues of  joint development of the oil bearing field Central,” Ushakov added.

Central field is located 150 km away from the shore in the Russian sector of the Caspian Sea and the oil and gas field was discovered there in 2008 by joint venture Centrecaspneftegas created by Gasprom and LUKoil. According to the agreements between Russia and Kazakhstan, these fields must be development jointly on the basis of the PSA and Kazmunaigas (KMG) has joined the project. But in 2009 Centrecaspneftegas’s geological exploration license has expired.

Kazakhstan demands concluding a new contract. The two countries’ Presidents will sign required documents and then Oil Company Central will be created (in which KMG will hold 50% share and Gasprom and LUKoil 25% each). The company will be able to obtain a “through” license for 25 years, including seven years period of geological exploration.

The extractible resources of Central field are estimated at 101 million tons of oil, 7.5 million tons of condensate and 162 billion cub.m. of gas. In 2013 KMG estimated approximate investments into the project at $8 billion, writes Commersant newspaper.-0—