KAZAKHSTAN PRESS CLUB
TEXACO INTERNATIONAL PETROLEUM CO.
Texaco entered Kazakhstan’s market in 1997, when the company bought a 20% stake in Karachaganak and became a partner in the development of this giant gas condensate field, alongside Agip/Eni, British Gas and Lukoil. In that year, Texaco and the Kazakhstan Government signed a production sharing agreement. Karachaganak’s geological reserves contain 1,200 million tonnes of gas condensate and over 1,350 million cubic metres of gas. The field is located 16 kilometres from the city of Aksai, Ural Region. It was discovered in 1979, and the beginning of its large-scale development was scheduled for 2000. The average daily production rates are 100,000 barrels of condensate and 450 million of standard cubic feet of gas.
In 1998, the company purchased 65% of shares, and became a partner and the operator of a geological exploration programme in North Buzachi. The North Buzachi field is located 240 km from the city of Aktau, Mangistau Region. According to preliminary estimates, it contains 1.5-2 billion barrels (215 to 285 million tonnes) of oil with a specific gravity of 19 to 21 API degrees. In 1998, Texaco began a staged programme of field reserve assessment in order to determine the commercial potential of the project. The current average production rate is 2-2.5 thousand barrels per day. About 70% of the project staff are locals.
Regarding the company’s marketing efforts, it should be mentioned that Texaco operates filling stations in Almaty and Astana. The stations are built to international standards, including criteria for environmental protection. The staff of the filling stations are Kazakhstani engineers and technicians.
(Information provided by Texaco’s Kazakhstan office)
EXXONMOBIL
ExxonMobil established its relations with Kazakhstan in 1993 when the company became the sole representative of the USA in the Caspian Consortium for the development of hydrocarbon resources in the Kazakh section of the Caspian Sea.
When the Consortium closed its operation in 1996, its participants selected 12 blocks for further exploration. Another consortium, OKIOC, has been established for conducting the exploration programme. OKIOC holds 14.3% in the new consortium. Exploratory drilling began in August 1999.
ExxonMobil holds 25% in Tengizchevroil JV which produces oil in the Tengiz field. From the time when the company initially purchased shares in TCO in 1996, daily production in the field has grown from 100 thousand barrels to 220 thousand barrels. Further increases to 260 thousand barrels a day are expected in the future.
In addition, ExxonMobil holds 7.5% in the Caspian Pipeline Consortium (CPC), which is constructing a pipeline for oil transportation from Tengiz to the Black Sea port of Novorossiisk. The construction project began in May 1996 and will be completed in 2001.
The company also sells petrol in two up-to-date filling stations in Almaty, and maintains a wide distribution network for Mobil motor and industrial oils.
(Information has been provided by ExxonMobil’s Kazakhstan office)
CHEVRON
Tengizchevroil. On 6th April 1993, Kazakhstan and Chevron established the Tengizchevroil (TCO) venture, in which the Kazakhstan government and Chevron hold equal shares (50/50). TCO was created for the development of the Tengiz field (discovered in 1979), which is the world’s deepest super giant hydrocarbon field.
Currently, the following companies have shares in this joint venture: Chevron (50%), Kazakhoil (20%), ExxonMobil (25%) and LukArko (5%).
Since 1993, when Tengiz produced 60,000 barrels daily, Tengizchevroil has been gradually increasing production, which now reaches 215,000 barrels daily. A new plant has been commissioned recently which will allow daily production to reach 260,000 barrels (33877 tonnes a day or 12 million tonnes a year) by the end of 2000. TCO intends to invest over $1bn in order to increase the annual production level to 17 million tonnes (370,000 barrels daily).
The strategy of TCO is to maintain the versatility and reliability of marketing and transport of its products (crude, condensed gas, residue gas and sulphur) in order to maintain maximum sales. This strategy allows production levels to be maintained as well. Currently, crude is transported by railroads (around 70% of TCO’s crude in 1999), by pipelines and by barges. The crude is first delivered to the Black Sea ports of Odessa and Feodosia in Ukraine, and to Batumi in Georgia, and then transported further by oil tankers for sale in Eastern and Western Europe.
In 1999, TCO paid around $330m to Kazakhstan in direct cash payments, including wages to Kazakhstani employees of TCO, the purchase of goods and services from local suppliers, tariffs paid to state companies, e.g. Kazakhstan Temir Zholy and KazTransOil, taxes and royalties paid to the Kazakhstan Government, and the re-payment of loans (distribution) to the National Oil Company Kazakhoil. The amount of direct payments over the first six months of 2000 was about $400m, and Chevron forecasts it surpassing $900m.
Currently, the share of Kazakhstani specialists among Tengizchevroil’s staff is 68% (it was 50% when the venture was established), or 2200 citizens of Kazakhstan. In addition, over 5,000 locals work with TCO’s contractors.
In 1996 Chevron built a filling station in Almaty, the company’s first outside the United States. In June 1998, Chevron inaugurated its second filling station in Kazakhstan, in Astana, and the third was opened in Atyrau in August 1998.
The Caspian Pipeline Consortium. CPC shareholders have invested over $1bn in the pipeline’s construction. Chevron is the largest private investor in the CPC (15% stake). The company’s investment in the CPC project will reach $750m by the time the pipeline’s construction is completed. A sea terminal is currently under construction.
(Information has been provided by the Kazakhstan office of Chevron)
Offshore Kazakhstan International Operating Company (OKIOC)
OKIOC is registered with the Kingdom of the Netherlands. Its goal is to implement a six-year exploration programme in the Northern Caspian under a production-sharing agreement with the Kazakhstan Government. The consortium shareholders are nine world renowned companies producing, processing and selling oil and gas: Agip (14.29%), BP Amoco Kazakhstan Ltd. (9.5%), British Gas International (14.29%), Inpex North Caspian Sea Ltd. (7.14%), ExxonMobil Kazakhstan (14.29%), Phillips Petroleum Kazakhstan Ltd. (7.14%), Shell Kazakhstan Exploration B.V. (14.29%), Statoil (4.8%) and Totalfina Elf (14.29%).
According to the PSA, OKIOC is the operator of the international consortium, which means that it is responsible for the implementation of working programmes approved by the steering committee. The shareholders control the fulfilment of OKIOC’s obligations under the PSA. OKIOC and each of its shareholders should have registered offices in Kazakhstan and are subject to the laws of the country.
(Information from the Internet)
KazakhstanCaspiyShelf
KazakhstanCaspiyShelf (KCS) was established in February 1993 by the Kazakhstan Government for the exploration and production of hydrocarbons in Kazakhstan’s section of the Caspian. The first step towards this goal was the Caspian Consortium Agreement signed 3rd December 1993. The Consortium included seven big companies: Agip, British Gas, British Petroleum, Stat?il, Mobil, Shell, and Total, with KCS being the operator of the Consortium.
The programme of the shelf geophysical survey carried out by the Consortium in 1994-1997 was one of the largest 2D seismic surveys to have ever been implemented in the world. At the same time, it was one of the shortest in terms of time spent on its implementation. The entire Kazakhstan portion of the Caspian was covered for the first time with a network of new 16?6-km seismic profiles (in some of the most promising places, the spacing was as small as 4x4 kilometres). A total of 26180 kilometres was processed during the survey.
The survey’s major results include the creation of a map of blocks for further geological study and development in the Kazakh part of the Caspian, and the discovery of huge structures which are 3 to 4-fold larger than the Tengiz field. The new prospects include Kashagan, Kairan, Aktota, and Kalamkas-moreh. Currently, the first group of blocks has been selected for drilling, and a new operational organisation, OKIOC, was created for petroleum operations in the Northern Caspian. OKIOC has completed preparations for exploratory drilling. KCS has also received promising blocks in this part of the sea.
In 1996-1998, KCS developed an infrastructure programme to support petroleum operations offshore. KCS has defined priority projects, and began to implement them. Seismic data were reinterpreted, geophysical data on the sea were archived, a data bank was created, and scientific and environmental research was carried out. The work conducted during that period allowed KCS to obtain all the required primary geological and geophysical information on the territories of the Caspian and Aral seas and their coastal zones.
When the Consortium completed its programme in 1998, KCS was transformed into a geological and geophysical service joint-stock company with the same name, and being a subsidiary of the National Oil Company Kazakhoil.
In 1999, KCS was awarded several contracts for conducting seismic surveys offshore, onshore and in transition zones. KCS has already begun these surveys in collaboration with such companies as PGS, JGI, and Dank.
The company’s current objective is to expand its geophysical services to include well logging and other services, and to implement infrastructure projects.
Today, KCS has acquired experience in being the operator of a large-scale international seismic project, and possesses up-to-date geophysical offshore and onshore equipment and machinery, including a survey fleet. The company has full-range hardware for processing and interpreting offshore and onshore geological and geophysical data, advanced software, production facilities, and qualified personnel both for organisation and corporate maintenance of projects, and for their realisation or provision of specific services.
(Information from the Internet)
CNPC International Aktobe Petroleum JSC
Deputy Direct General of CNPC International Aktobe Petroleum JSC reported that the company had produced over 1.6 million tonnes of oil by 2nd September 2000. The amount of oil had increased by 17% vs. the same period last year. In addition, 194.3 million cubic metres of gas were utilised during the first half of 2000, of which 127.8 million cubic metres were sold to outside consumers.
These accomplishments are based on a number of organisational and technical measures. The Kazakhstan-China Great Wall drilling company has completed drilling seven of eight wells of the first phase, and has begun the drilling of three new wells under the second phase. The total investment of CNPC International Aktobe Petroleum has grown 17-fold compared with the similar period last year. The amount paid by the company in taxes is triple that paid during the same period last year.
(Aktyubinsky Vestnik, 2/9/2000)
KUAT Holding Company
The KUAT Holding Company was established in Kazakhstan in 1992. Initially it developed as a production enterprise. In 1994, however, it received two petroleum fields from the government: Konys and Bektas in Kyzyl-Orda Region. In order to develop the fields, the same year KUAT established a joint venture, KuatAmlonMunai (KAM JV) with the British Amlon Ltd. The authorized capital of the joint venture was $10m. In 1995, KAM received a governmental license to explore and develop hydrocarbon resources in the fields.
An estimation of the oil and gas reserves in Konys and Bektas has shown that their recoverable reserves amount to 18 million tonnes of oil and 6.2 billion cubic metres of gas. In 1999, KAM JV produced over 40,000 tonnes of oil, and is planning to increase the production to 200,000 tonnes in 2000. In January 2000, KAM began the construction of its own oil-loading terminal in Kyzyl-Orda with a handing capacity of 2000 cubic metres per day.
In addition, KUAT has hydrocarbon exploration and production licences for three prospects in the Pavlodar region, whose reserves have been estimated at 150 million tonnes of oil. Two more joint ventures, Buran and Nurbai, have been created with the Kuwaiti Gulf Star Investment for developing two of the three licensed areas. Taking account of the nearby Omsk-Pavlodar pipeline and the Pavlodar refinery, the region has a strategic importance for KUAT. In co-operation with the mentioned Kuwaiti company, KUAT has established Zaisan JV for operations under an exploration licence in Eastern Kazakhstan. The region is fairly promising and has a proved high hydrocarbon potential.
(Information provided by KuatAmlonMunai JV)
Table of contents
Economic Development of Kazakhstan and Policy of the National Bank at the Current Stage Grigory Marchenko
Kazakhstan - Resource Management Boris Zilbermints, Ian Dunderdale
Changes in Kazakh Legislation and the Interests of Foreign Investors in the Oil Sector Alexander Lesser
