Azernews.Az

The issue of extending the contract on oil field development at Kashagan will be discussed after 2014-2015, managing director of the Kazakh Sovereign Wealth Fund Samruk-Kazyna Malik Salimgereyev told the media on Wednesday, Trend news agency reported.

"It is too early to speak about extending the term," he said. "Firstly, extending the contract is a duty of the Kazakh Oil and Gas Ministry."

The PSA for the Kashagan oil field was signed by the Kazakh government and investors in 1997 for a period of 40 years. According to conditions, the cost of deposit exploration is paid for by income from commercial oil production. Now, foreign investors arguing economic expediency are seeking to increase the terms of the contract for another 20 years.

He added that shareholders of the consortium for the North-Caspian project (Kashagan) must lay out further development plans for the field by 2014-2015.

"Therefore, when we have determined how to operate in the future, we will then consider extending the contract," he said.

Kashagan is one of the largest fields discovered in the past 40 years. Kazakh geologists estimate geological oil reserves of 4.8 billion tons. According to the project operator, total oil reserves are 38 billion barrels (six billion tons), with a recoverable volume of about 10 billion barrels. Natural gas reserves are estimated at over one trillion cubic meters.

The companies developing the project are planning to begin commercial production on Kashagan in the first quarter of 2013.

An agreement was signed in late May of 2012 to settle certain issues between the Kazakh government and contracting companies working on the North-Caspian project. According to agreements, the parties approved an amendment to the plan and the development budget of Kashagan.

Launching oil production at Kashagan was postponed several times. The consortium of foreign companies led by Eni initially promised to guarantee commercial production in 2008, later it was postponed until 2011. Another memorandum was later signed. Commercial oil production at the Kashagan field in the Caspian Sea was postponed until 2013.

At present the Kashagan project participants are Eni, Royal Dutch Shell, Exxon Mobil, Total and KazMunaiGas, which owns equal shares (16.81 per cent), as well as ConocoPhillips - 8.4 per cent and Japan's Inpex - 7.55 per cent.