Gazprom’s JV with Kazakhstan could be delayed – minister
The joint venture (JV) between Gazprom and Kazakhstan to produce gas at the giant Karachaganak field and process it in the Russian city of Orenburg could be suspended due to the current global financial turmoil, according to Sauat Mynbayev, Kazakhstan’s energy and natural resources minister.
Mynbayev was quoted by Russian news agency Ria Novosti as saying during a speech in parliament that “BG and AGIP (Eni) – the partner companies in the Karachaganak project – have requested a delay in the third phase due to the current crisis”. The concrete decision about the status of the project and the timescale of Gazprom’s participation will be decided in the second half of 2009, the minister added.
Karachaganak’s total gas reserves are estimated at 1.35 trillion cubic metres. The development of the field is operated under the terms of a 40-year production sharing agreement by a consortium comprising BG Group (32.5% stake), Eni (32.5%), Chevron (20%) and Lukoil (15%).
The agreement with Gazprom was for the processing of gas at the Orenburg facility. In 2008, the plant received 8bn cubic metres (Gm³) of gas from the Karachaganak field. According to the deal, Gazprom was to receive another 9Gm³ this year.
The JV aimed at processing 16–17Gm³/year during the peak of Karachagank’s production, essentially keeping the plant operational at full capacity until 2030. Currently, the consortium operates phase II of the production. Both BG and AGIP have now stated that development of phase III of the Karachaganak project will be delayed because of the crisis in the financial markets.
Gazprom could not confirm that a suspension of operations or a reduction of volume will take place. “Our work in the Karachaganak project is being carried out in accordance with the agreements signed earlier,” said a Gazprom spokesman.
The output from the Orenburg plant was largely re-exported to Kazakhstan, although a significant part was deemed for exports to Europe. RK
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