By Kamila Aliyeva
Russia’s oil giant LUKOIL, with little prospect of obtaining new offshore areas in Russia, wants to acquire stakes in two new blocks on the Kazakh shelf of the Caspian Sea, Kommersant reported.
In this regard, the company is interested in P-2 and Zhenis blocks, which were refused by Total back in 2012, according to Kazakh Energy Ministry.
In the 2000s, international investors showed an active interest in the Kazakh part of the Caspian shelf, both because of rising oil prices, and in connection with the expectation of major discoveries.
So, according to Gaffney, Cline & Associates estimates, without taking into account the reserves of the North Caspian project (Kashagan, Aktoty, Kairan and Kalamkas-Sea), the resources of the Kazakhstan shelf are 2.3 billion tons of oil.
However, in 2011 there was a turning point, including due to unsuccessful exploration results. In particular, LUKOIL drilled dry wells in two sections of Atash and Tyub-Karagan, as did Rosneft for Kurmangazy.
In addition, at the peak of oil prices, the government of Kazakhstan seriously revised its tax policy - it was decided not to enter into production sharing agreements under new projects and to conduct them in the framework of a standard tax regime. As a result, in the spring of 2012, Total abandoned the Zhenis bloc. Following this, Eni, ConocoPhillips and Statoil also withdrew from the projects.
However, this year the Kazakh authorities improved the tax conditions for offshore projects, returning investors’ interest.
LUKOIL is discussing with KazMunaiGas its entry into Zhenis and I-P-2 projects in the Kazakh part of the Caspian Sea shelf, Kazakh Energy Minister Kanat Bozumbayev said.
These new sites are located in the southern part of the Kazakh shelf, and other JVs of LUKOIL and KazMunaiGas - Central (LUKOIL and GazpromNeft have 25 percent each) and Khvalynskoye field (50 percent is the Russian company's share) are located near the area.
The fact that LUKOIL is studying two blocks along the border with Russia was announced by the head of the oil company, Vagit Alekperov, in February. The oil company itself declined to comment.
LUKOIL’s head explained the interest in offshore sections in Kazakhstan by the relief from of tax legislation for offshore operations from 2018, which “allows us to have a good rate of return on complex deposits.”
Now, instead of a payment for reimbursement of historical costs, MET and the excess profit tax, there is an alternative tax with a flexible rate that takes into account the volatility of oil prices - at a price below $50 per barrel, the tax is zero, then it grows to a maximum of 30 percent at a $90 per barrel price.
The report on the socio-economic development of Mangistau region in 2014 said that Zhenis and I-P-2 would be explores at the expense of strategic partners.
LUKOIL has been operating in Kazakhstan since 1995. The company is a party to several onshore production projects and a member of the Caspian Pipeline Consortium (CPC). LUKOIL has been investing substantially both in production projects and in the region’s social development.
In Kazakhstan, LUKOIL owns stakes in three oil projects, that is Tengiz (5 percent share), Karachaganak (13.5 percent) and Kumkol (50 percent). LUKOIL also develops fields in the north of the Caspian Sea in the Russian sector - Filanovsky and Korchagin (15 million tons have been extracted since 2010).
Kamila Aliyeva is AzerNews’ staff journalist, follow her on Twitter: @Kami_Aliyeva
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