ALMATY/OCT. 1 (The Conway Bulletin) — The partners developing the Karachagank oil and gas site, a cornerstone of Kazakhstan’s energy production, agreed to pay the Kazakh government $1.1b, settling a long-running dispute over profit sharing.
Kazakhstan will also receive an estimated $415m in extra revenue by 2037, based on the price of oil at $80/barrel, in the new profit sharing deal.
For the Karachaganak partners — Shell, ENI, Lukoil, Chevron and Kazmunaigas — and their shareholders, the deal marks the end of a dispute that could have severely undermined the project from 2015 when Kazakh officials first accused the consortium of an unfair profit sharing deal. None of the partners have yet commented on the deal.
The final $1.1b agreed fee is less than the initial $1.6b that Kazakhstan had pushed, although the additional earnings will probably take it close to that amount.
There is also a $1b long-term loan that the consortium has agreed to give to Kazakhstan to develop its regions.
The partners have also committed to spending $5b on upgrading the site to ensure that production continues.
Karachaganak is one of the most important oil and gas projects in Kazakhstan producing nearly 50% of its gas and 18% of its oil production.
This year, Kazakhstan has increased oil production by 5.3% to 60m tonnes by the end of August, the Kazakh energy ministry said earlier this month.
ENDS
>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018