BG and Kazakhstan: 10 Years of our Joint History
It has been ten years since the Independence of Kazakhstan gave the country the opportunity to be developed as a strong member of world community. We are very happy to be part of it and contribute to the economic and social progress that Kazakhstan has made during these ten significant years of transition.
BG has three major investments in Kazakhstan. BG holds 32.5 per cent interest in the huge Karachaganak gas condensate and oil field situated in West Kazakhstan Oblast near Uralsk. Directly related to the Karachaganak Field, BG holds a small but important interest in the Caspian Pipeline Consortium (CPC). The third interest, as one of seven shareholders, is in the North Caspian Consortium operated by Agip KCO.
These ten years now allow us to look back and say that the country and its partners reached very important results. We invite you to review the brief history of our partnership during this period.
A team of BG geologists first visits Kazakhstan.
BG came to Kazakhstan to evaluate the business options in the country and delivered a week- long seminar in Alma-Ata (then Almaty) on Legal, Commercial and Economic issues in the Petroleum Industry.
December 16: Kazakhstan declared its Independence.
July: Agreement between Kazakhstan authorities and BG and Agip giving these two companies the exclusive rights to negotiate the Production Sharing Agreement (PSA) on the super giant Karachaganak gas condensate field. BG and its partner Agip prepare to take over the operatorship of the field.
October: A provisional Operating entity called the KEEIG (Karachaganak European Economic Interest Grouping) was established and carried out a number of technical and safety related studies at Karachaganak.
December: The International Caspian Consortium was created to acquire 2D seismic data over the Kazakh part of the Caspian Shelf. The Consortium consisted of BG, Agip, British Petroleum, Statoil, Mobil, Total and Shell and KazakhstanCaspiShelf (KCS), with the KCS Consortium as the operator.
The KEEIG carried out a variety of remedial technical and safety activities in the field including remedial works with respect to well 321.
In cooperation with Southampton University, Great Britain, BG established an environmental Chair, which is now based in Almaty Institute of Power Engineering and Telecommunications (AIPET).
The Karachaganak Production Sharing Principles Agreement (PSPA) was signed between the Kazakh Government and BG, Agip and Gasprom. It allowed BG and Agip to take over operatorship from Kazakhgaz and halt the rapid production decline and improve the safety environmental performance of the facilities. At this time a contract was entered into with Karachaganakgazprom to support field operations.
April: An agreement between Kazakhstan, Russia, Oman and the consortium of foreign oil and gas companies was reached to develop/ build an export pipeline from the Caspian to the Black Sea resulting in the formation of the Caspian Pipeline Consortium (CPC).
May: The International Caspian Consortium completed its initial work program of acquiring, processing and interpreting 2D seismic data across the whole of the Kazakh sector of the Caspian Sea, having invested $220m since 1993.
August: Texaco acquired a 20% share of Karachaganak from BG and Agip.
October: BG first brought the BG Wildlife Photographer of the Year (BGWPhY) exhibition to Kazakhstan, which regularly tours all the cities of BG’s operations.
November: LUKOil took over 15% share of the project formerly held by Gasprom.
In Washington in the presence of President Nazarbaev and the then US vice president Al Gore:
• the Final PSA was signed between the Government of the RoK and partners of Karachaganak Integrated Organization: BG, Agip, Texaco and LUKOil;
• the North Caspian Offshore Production Sharing agreement was signed between the Government of the RoK and the partners: BG, Agip, BP/Statoil, KCS, Mobil, Shell, Total.
January: Both the Karachaganak FPSA and North Caspian PSA became effective.
September: On the basis of the International Caspian Consortium a Joint Operating Organization called OKIOC (Offshore Kazakhstan International Operating Company) was created.
October: The state-owned KCS sold its share in The North Caspian Project to Inpex and Phillips Petroleum.
November: The official ceremony of approval of the feasibility study of the Tengiz – Novorossiysk Pipeline took place.
July: OKIOC towed the Sunkar Rig into the Caspian sea after it was fitted out in Astrakhan to perform drilling in the Kazakh sector of Caspian Shelf.
August: OKIOC commenced drilling the first well at East Kashagan.
June: OKIOC successfully completed the exploratory drilling at the East Kashagan.
July: President Nazarbaev announces East Kashagan as a significant oil and gas discovery
October: BG demerged into the BG Group, which is active within the international business sector, including projects in Kazakhstan, and Lattice, which is developing the downstream gas business in the UK.
February: Partners of the Caspian Consortium elected Agip KCO as single operator for North Caspian Project.
March: CPC line fill started in Atyrau.
May: Appraisal of the potentially giant Kashagan oil field began.
October: CPC commenced operation.
We are delighted to mention that the production of gas condensate at Karachaganak field exceeds 4 MTY while the production of gas is over 3 BCMY. The number of employed people at all the BG projects in Kazakhstan, including Karachaganak, North Caspian Project and the CPC, is more than 12,000 and the share of local employees significantly increased these days. BG’s investments into social sphere and community projects exceed $4m each year.
This material is provided by Leila Kulbaeva,
External Affairs Adviser, BG Kazakhstan.
BG is very proud to be a partner of the Republic of Kazakhstan and looking forward to continuing cooperation for the prosperity of all stakeholders.
On the occasion of the 10th Anniversary of Kazakhstani Independence we sincerely wish you success in future.
Table of contents
Astana, The New City: the Future of the Capital Starts Today Berlik Yerezhepov
The European Bank of Reconstruction and Development is Assuming the Role of an Engine of Reform in Kazakhstan's Mining Industry Gaboury Suzanne
Comments on the Draft Law On Investments Aigoul Kenzhebayeva
Comments on the Investment Bill Banu Babayeva
Submission of Foreign Investors Disputes over Subsoil Use Contracts to International Arbitration Raushan Jazykbaeva
Legal Aspects of Attracting Kazakhstani Goods, Services and Personnel to Oil Operations in the Republic of Kazakhstan Akhmetzhan Abdullayev