Azernews.Az

By Aynur Jafarova

Kazakhstan's Oil and Gas Ministry has confirmed that Statoil gave up a Kazakh offshore block after Norway's biggest energy producer spent about seven years negotiating to start exploration.

"Kazakhstan's national oil and gas company KazMunaiGas (KMG) will consider the issue of developing the Abai block in the Caspian Sea with other partners," Minister Sauat Mynbayev said following a government meeting. The minister did not cite the partner.

Statoil spokesman Bard Glad Pedersen said on Monday that Statoil has decided not to pursue negotiations on Kazakhstan's Abai project.

"We have decided not to pursue negotiations as a part of the global prioritization process and the overall commercial and technical evaluations related to the Abai project," Pedersen said.

Minister Mynbayev said that Kazakhstan has not suffered any losses due to Statoil's withdrawal from the project, as the Norwegian company bore these costs. The minister did not specify the amount of expenses.

The Abai block is located 65 kilometers from the coast at a depth of 8-10 meters in the northern part of the Kazakh sector of the Caspian Sea.

Kazakh politician Daniyar Ashimbayev believes that the withdrawal of Statoil from the Caspian shelf is not a tragedy for Kazakhstan; it is just a part of the working process.

Ashimbayev said it would be better to work with Statoil, which has a great practice and high technologies in the oil and gas sector and this company has great authority in the world oil markets. But he added, "However, Kazakhstan holds negotiations with Central Asian and Eastern Europe companies who aim to participate at the investment projects in the Caspian shelf of Kazakhstan. The important issue is not the reasons why companies withdraw from projects in Kazakhstan, but who will replace them and new investors' conditions for participation in the project."

The politician stressed that there is an opportunity for the Kazakh oil and gas sector to widen its geographic scope of investors.

Earlier, Statoil's executive vice president for exploration Tim Dodson said cooperation on the Abai block is an important strategic step for Statoil in terms of international growth.

KazMunaiGas previously announced that Abai has 760 million tons of oil; 4 million tons of oil and 500 million cubic meters of natural gas per year can be produced at this deposit.

The first memorandum of understanding on possible cooperation on Abai was signed between KazMunaiGas and Statoil on June 30, 2005.

In April 2011, KazMunaiGas and Statoil signed an agreement of principles on the offshore Abai block. According to the agreement, the parties planned to work for coordination of the conditions of joint activity within the Abai project. Moreover, they agreed on Statoil's participation in the building of a jack-up rig which would be used in the future for exploration of the Caspian Sea shelf blocks.

KMG is Kazakhstan's national exploration, production, processing and transportation operator. 100 percent of the shares belong to the Sovereign Wealth Fund Samruk-Kazyna.

Statoil is an international energy company represented in over 40 countries. The company is one of the world's largest exporters of crude oil, the largest operator of deepwater fields with depths of over 100 meters, the second largest exporter of gas to Europe, and the largest seller of oil products in Scandinavia. The Statoil office in Astana was opened in 2004.