Kazakhs peg Khvalynskoye development at $5 billion

Development of Khvalynskoye natural gas field in Kazakhstan’s sector of the Caspian Sea will cost $5 billion in the first phase, Kairgeldy Kabyldin, chief executive officer of state-owned KazMunaiGaz (KMG), told delegates at the Kazakhstan International Oil & Gas Exhibition & Conference.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Oct. 8 -- Development of Khvalynskoye natural gas field in Kazakhstan’s sector of the Caspian Sea will cost $5 billion in the first phase, Kairgeldy Kabyldin, chief executive officer of state-owned KazMunaiGaz (KMG), told delegates at the Kazakhstan International Oil & Gas Exhibition & Conference.

Kabyldin’s remarks follow a statement by Total SA that it signed a heads of agreement (HOA) establishing the principles of a partnership with KMG for development of Khvalynskoye.

Located in 25 m of water in the Caspian Sea on the border between Kazakhstan and Russia, Khvalynskoye is a conventional gas-condensate field to be developed by Russia’s OAO Lukoil, operator. Gas from the field will go to Russia.

Total and GDF Suez Group will invest $1 billion in the project, which is expected to start producing as much as 9 billion cu m/year of gas in 2016.

The agreement, which boosts Total's role in the region, was signed in the presence of Kazakh President Nursultan Nazarbayev and French President Nicolas Sarkozy, who was on a visit to Kazakhstan (OGJ Online, Oct. 6, 2009).

Khvalynskoye is jointly owned with Lukoil, which said it had not concluded a production-sharing contract with KMG yet and would keep its 50% stake.

Meanwhile, under the terms of the HOA, Total and GDF Suez will acquire a participation of 25% (Total 17%, GDF Suez 8%) from the initial 50% stake held by KMG.

Contact Eric Watkins at hippalus@yahoo.com.

More in Home