Eric Watkins
Oil Diplomacy Editor
LOS ANGELES, Oct. 6 -- Kazakhstan's state-owned KazMunaiGas has signed a memorandum of understanding with ConocoPhillips and Mubadala Development Co. for joint exploration and production of the N Block in the Caspian Sea.
"The parties will now have until Dec. 31, 2008, to negotiate the definitive agreements for the assignment by KMG of a 49% interest in the subsoil use contract to be shared equally between ConocoPhillips and Mubadala," the Kazakh firm said, adding that, "KMG will remain the majority partner in the venture."
The N Block, also known as Nursultan, lies 30 km south-southwest off Aktau and covers some 8,100 sq km. According to KMG, the block "is considered highly prospective for both oil and gas." KMG had earlier estimated the block to hold about 637 million tonnes of (or 4.7 billion bbl) of oil equivalent.
The MOU was signed by KMG Chief Executive Kairgeldy Kabyldin, ConocoPhillips Chief Executive Jim Mulva, and Mubadala Chief Executive Khaldoon Khalifa Al Mubarak.
In January Kazakhstan's ministry of energy and mineral resources announced the signing of a profit-sharing agreement with KMG for N Block.
At the time, KMG Vice-Pres. Kezhebek Ibrashev said, "According to the government, at the stage of exploration and assessment KazMunaiGas will be operating this project independently."
Ibrashev said the company's minimum financial liabilities for the period of exploration were set at $40 million, and that the PSA specifies an allocation of funds for social-development projects, training of local specialists and monitoring and maintenance of the wells drilled earlier within the licensed area.
The N Block had been the target of attention of both Royal Dutch Shell PLC and ConocoPhillips before the Kazakh government granted exclusive exploration and production rights to KMG.
Contact Eric Watkins at [email protected].
