Azernews.Az

By Aynur Jafarova

Kazakhstan intends to use the priority right to acquire the share of ConocoPhillips in the production sharing agreement on development of the giant Kashagan field located in the Kazakh sector of the Caspian Sea, the Kazakh Ministry of Oil and Gas said on Tuesday.

According to the report, the ministry has sent an appropriate governmental notification to the U.S company on intention to use the priority right provided by the Kazakh law "On subsoil and subsoil use" and to acquire the interest of ConocoPhillips in North Caspian Sea Production Sharing Agreement at a rate of 8.4 percent.

KazMunaiGas national joint stock company will act as a buyer of ConocoPhillips stake in the North Caspian project.

KazMunaiGas has started the registration of all the necessary procedures, the report said.

Earlier KazMunaiGas head Lazzat Kiinov said in an interview with Reuters that the Chinese company CNPC will buy a stake in Kazakh Kashagan oil field on the Caspian shelf by paying over $5 billion for it.

So, KazMunaiGas will sell the package and receive a package of another participant - ConocoPhillips, which will withdraw from the project.

Last year, Conoco Phillips announced plans to sell its 8.4 percent stake in Kashagan to Indian ONGC Videsh Limited for $5 billion. Other partners of the consortium did not use their pre-emption rights.

Furthermore, a ceremony of commissioning the production facilities and constructing the facilities required for initial production was held at the Kashagan field in Kazakhstan on July 1 with the participation of Kazakh President Nursultan Nazarbayev and British Prime Minister David Cameron.

North Caspian Operating Company's (NCOC) Managing Director Pierre Offant stressed that commissioning the production facilities, which means their phased commissioning, marks a strong start and continued growth of commercial oil production.

"It should be stressed that safety has always been our priority throughout this difficult process," Offant added.

Kashagan is one of the largest fields discovered in the past 40 years. Recoverable oil reserves of Kashagan are estimated at 11 billion barrels, whereas total geological crude reserves stand at 35 billion barrels. It is believed to be the largest oil field in the world after Prudo Bay in Alaska. Besides, natural gas reserves are estimated at over 1 trillion cubic meters.

The Kashagan commissioning process is a sequential process that involves more than 40 actions preceding the commencement of production and gradual reaching the target level because of the scale and complexity of the project.

The production volume is planned to gradually increase for the second half of 2013. It is expected that around 180,000 barrels per day will be extracted at the first phase, while this figure will reach 370,000 barrels per day at the second phase.

NCOC reported earlier that the commencement of oil production from the Kashagan field is planned in the second half of 2013.

Experts believe that increase of oil production in Kazakhstan completely depends on the start of the Kashagan production as it is currently the only oil field capable of significantly boosting oil production in the country.

The future development projects would open up the opportunities to increase the production volumes significantly and it will turn Kashagan into one of the largest suppliers of the global energy market.