Russia and Kazakhstan push for hydrocarbon expansion with Caspian projects

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Kazakh President Kassym-Jomart Tokayev has revealed that Russian oil giant Lukoil will help the largest Central Asian country develop oil fields located in the Kazakh part of the Caspian Sea.

The declaration was made during the 17th Kazakhstan-Russia Interregional Cooperation Forum held online Thursday.

“We are starting to develop the great Kalamkas-Sea and Khazar fields,” President Tokayev said. “The strategic partner on the Russian side has been identified – this is Lukoil. The total cost of the project will be around $ 5 billion.

Kalamkas-Sea is an offshore field discovered in 2002 and located in the northeastern part of the Caspian Sea, near the giant Kashagan field – one of the world’s greatest finds of the past four decades.

In 2013, North Caspian Operating Company NV (NCOC) – the operator of Kashagan – announcement a commercial discovery at Kalamkas-Sea. The geological reserves of the oil field would have been valued to about 150 million tonnes of oil and 15 billion cubic meters of gas. However, in 2019, NCOC, including energy giants such as Eni, Shell, ExxonMobil, Total, CNPC, Inpex, and KazMunayGas, all got out of the Kalamkas-Mer project.

Discovered in 2007, Khazar is also located next to the Kashagan field. The operating company Caspi Meruerty BV operates Khazar under a production sharing agreement, which includes KazMunayGas and Oman Pearls Company Limited. In 2019, the Anglo-Dutch oil and gas conglomerate Shell reduced its oil and gas exploration plans for Khazar due to “the low profitability of these projects in a context of high capital expenditure. Prior to the withdrawal, Shell had invested about $ 900 million in the project.

At the same time, the Kazakh president considers that it is also vital to facilitate the development of two gas fields, Khvalynskoye and Imashevskoye. Both are major joint projects with Russia.

“It is important to resolve business issues with Gazprom as soon as possible,” President Tokayev said. noted, referring to the Russian energy giant.

The oil and gas industries are the main pillars of Moscow and Nour-Sultan, as Russia and Kazakhstan are teeming with hydrocarbons. The two post-Soviet countries have maintained strong partnerships in the energy sector through already existing narrow economic, technological and transport initiatives.

The project in Kazakhstan will not be a first for Lukoil, which was implied there since 1995.

Together with Rosneft, the company has been responsible for exploring the Tengiz oil and gas field, which ranks as the deepest supergiant oil field in the world. In addition, Lukoil is responsible for exploring the Karachaganak (13.5%) and the Zhenis block (50%). It seems that Lukoil is considering invest approximately $ 350 million in exploration on the Zhenis block over 7 to 9 years.

Earlier this year, Lukoil sign a Sale and Purchase Agreement (SPA) with KazMunayGas to acquire a 49.99% stake in the capital of Al-Farabi Operating LLP, a joint venture to develop an offshore block located in the Kazakh part of the Caspian Sea. According to Lukoil’s data, the recoverable resources of the Al-Farabi block are valued to 15.1 million tonnes.

Lukoil is also a member of the Caspian Pipeline Consortium, through which crude oil is transported.


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