Azernews.Az

By Aynur Jafarova

China allocates loans to Kazakhstan for expenses of the national oil and gas company KazMunaiGas in the project on the development of the giant Kashagan field located in the Kazakh sector of the Caspian Sea, but it is not financing, a source at the Kazakh oil and gas market told Azerbaijan's Trend news agency.

According to the source, allocation of one more loan to the national company by China was one of the highlights in the decision of the government to sell 8.4 percent in the project on Kashagan field development.

Earlier Russian expert on Central Asia Igor Ivakhnenko told Trend that Beijing has more chances than Delhi to enter the North Caspian Project.

According to him, amid a fall in oil prices, Kazakhstan will again need loans and "Beijing, as before, will be ready to allocate them".

"Till now India has not given anything significant to Kazakhstan and is unlikely to do so. Due to this Beijing has more chances on this purchase than Delhi," Ivakhnenko concluded.

Deputy Chairman of the Board of Geology and Perspective Projects at KazMunaiGas, Kurmangazi Iskaziyev, said on August 19 that the company plans to conclude the negotiations with US ConocoPhillips on acquisition of its share in the North Caspian Project.

According to him, the deal is planned to be concluded by late 2013.

In July 2013, the Kazakh Oil and Gas Ministry said Kazakhstan intends to use the priority right to acquire the share of ConocoPhillips in the production sharing agreement on the development of the Kashagan field.

The ministry has sent a notification to the US company to state its intention on exercising the priority right provided by the Kazakh law "On subsoil and subsoil use" and to acquire the participating interest of ConocoPhillips in North Caspian Sea Production Sharing Agreement in the amount of 8.4 percent.

KazMunaiGas will act as a buyer of ConocoPhillips' stake in the North Caspian Project.

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

ConocoPhillips is expected to withdraw from the project.

Last year, ConocoPhillips 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.

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

Production is planned to gradually increase over the second half of 2013. It is expected that around 180,000 barrels per day will be extracted at the first phase, and the figure will reach 370,000 bpd during the second phase.

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

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