AT THE FIRST STAGE VIA AKTAU - BAKU WILL BE SHIPPED UP TO 7,5 MLN. TONS
The President of JSC National Company "KazMunayGaz", Mr. Uzakbay Karabalin.
Caspian Energy: Mr. Uzakbay Suleymenovich, Which projects do you think that more priority for the company, their development and which the figures and perspectives of stated projects' development you can mention?
The President of OJSC "NC "KazMunayGaz" Uzakbay Karabalin: Taking into consideration the present realities, we expect the major perspectives at Zhambay and Atashskiy areas. At present, there are fulfilled the geophysical investigations and on their base in 2006 at stated areas will be carried the prospecting drilling. The basic for fulfilling of prospecting drilling at the areas is the Contract for prospecting within the areas concluded between the Ministry of Energy and Mineral Resources of the republic of Kazakhstan and "NC "KazMunayGaz" (KMG). The area makes 9744 sq. km. The distance from the west border of area to the nearest coast of Bozashi peninsula is 90 km. and the shallow zone is in the closer to Bozashi peninsula.
On the result of regional seismic prospecting operations at Atashskiy the Atash structure was discovered that locates in the North - Western of Tyub-Karagan within the one tectonic zone. Atashskiy elevation on the base of Jurassic has 36,2 sq. km. In 2004, there were fulfilled the detail seismic prospecting operations in 1057 km. The field shooting is over. There is planned in 2005 the completion of interpretation of seismic data and beginning for drilling preparation of prospecting well. At other South Zhambil - South Zaburunye area the bowel using is fulfilled on basic of Production Sharing Agreement concluded between the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan and "Zhambay" on December 26, 2001. The operation region are located within the North-Western aquatory of the Caspian. The area of geology allocation makes 2187,2 sq. km. In administrative regarding the allotted work belongs to Atyrau region.
Geology-geophysical investigations at the area are fulfilled in 1960-1990.
In 2003 the JSC "Kazakhstancaspianshelf" in licensed territory by the order of "Zhambay" carried out the regional seismic prospecting operation 2D with 320,7 linear km. In 2004, there were realized the detail searching seismic prospecting operations 2D with 321 linear km. at discovered Kosarna structure. On result of field's seismic data interpretation the location of the first prospecting well was defined.
At these areas in 2005 we are going to continue the detail seismic prospecting 2D with 350 linear km., the construction of access road and islands under the prospecting well at Kosarna structure.
How is fulfilled the national program of the Caspian Sea development confirmed by the President of Kazakhstan Nursultan Nazarbayev in 2003? On what the stage is the development of corresponding infrastructure and legal lawful legislation?
The State program considers the three stages. The first stage is planned for 2003-2005. On the base of the stage there are fulfilled the main preparation work to development of oil operations in the sea, including the development of transport communications, construction of coastal service bases, general investigations of oil operations infusion to ecology of the Caspian, solving of matters regarding sea units protection from the ice, creation of required service vessels' flotilla and tanker fleet, specialists' training and etc.
Within the frame of State program the main attention is paid to development of he North Caspian project that is the first project in Kazakhstan sector of the Caspian Sea.
At the same time on April 30, 2005 mutually with the Russian "LUKOIL" the drilling of the first prospecting well at Tyub-Karagan in the Kazakhstan sector of the Caspian began. The basic of the drilling is studying of geology section, the allotment of reservoir beds, their testing and estimation for industry profitability. The designed depth of vertical well makes 2500 m. under the water's depth in drilling point 7 m. The drilling is realized by "LUKOIL Shelf Ltd." self-lifting floating drilling unit (SFDU) "Astra" on zero throw with complete utilization of all processing wastes. On technical project the ongoing of construction operation of the well will be 106 days. The further carrying out of searching prospecting and estimations operations will depend on results of drilling of the first well, its testing and received results' estimation.
I would like to note that there was signed the Memorandum between "NC "KazMunayGaz" and "Agip KCO" about mutual understanding. The paper defines the main points of mutual advantageous cooperation of two companies in the sphere of creation of coastal infrastructure units, the supporting of offshore oil operations in Kazakhstan sector of the Caspian. According to Memorandum our associated "TenizServis" will be implementing the financing and construction filling stations for vessels, constructions for wastes' utilization, particularly in Tyub-Karagan Gulf of Mangistau region and the North-Caspian bases for reacting to spill ails in Atyrau region. The main user will be Agip KCO yet that fulfills 95% of whole work in the Kazakhstan shelf of the Caspian. In future the other investors will be using the same services.
The investments by stated project will make million of dollars and the terms of execution by each project - from 1 to 3 years. The construction is planned to be launched at the beginning of next year and will be continued till 2015. The signed paper shows the intention of KMG in contribution to State program on development of Kazakhstan sector in the Caspian.
The State program realization supposes the improvement of country's legislative base, regulation of issues regarding hydrocarbon prospecting and production. In accordance with plan the Law project of the Republic of Kazakhstan "About Production Sharing Agreements (contracts) under fulfillment of offshore operations" was elaborated.
The necessity in adopting of separate law is caused that the given field is needed in more specific legislative regulation. Furthermore, the adopting of such legislation act is permitted to rely on economy perspectives including the attraction of big Kazakhstan's goods, works and services during the fulfillment of oil operations in the sea.
During the elaboration of the Bill there was used the experience of using of the similar laws with the other countries, including Russian Federation and Production Sharing Agreement in the Republic of Kazakhstan.
PSA content is that the Kazakhstan provides to specified time with right for execution of work on prospecting and production or production at blocks stated in the terms of competition. The contractor is obliged to fulfill of stated works due to its own facilities and hazards with full execution of proposals and obeying the legislation of the Republic of Kazakhstan, positions and obligations considered by PSA.
The Bill set the terms for bowels using that can not exceed thirty five years for works on joint prospecting and production, twenty five years for works on production or forty five years in case of great hydrocarbon reserves. the Bill defines the powers of State bodies on PSA. Moreover, the Bill firstly defined the status and functions of power body in PSA that is innovation for legislation not only of the RK but also CIS countries and we can mention that the power of stated body was not being defined at level of the law thus far.
I would like to emphasize one more feature of the Bill which is the regulation of competition fulfillment procedures on getting of right for oil operations execution on the terms of PSA.
Firstly the Bill considers the two stages of competition procedures under presence of large candidates included analyzing of economy interests of State in result of such contract using as PSA. First of all, there is stated the possibility of high technology, new processing plants, main and other pipelines, infrastructure and other units, large attraction of Kazakhstan employees and so on introduction in the territory.
Despite that during Parliament hearings the Bill was changed, its main conception including above mentioned were not changed. So, the Bill was adopted by Majilis of Parliament of the Republic of Kazakhstan. At present, the law's further consideration is continued in the Parliament.
On what stage is the development of "Kashagan", including the development of transport infrastructure?
Kashagan field is under the stage of development. The plan and budget of field's development were confirmed on February 25, 2004. Presently, there are executed the working designing, purchasing of equipment and initial construction operations on first two queues of Experimental Industrial Development (EID). Simultaneously the operations are fulfilled on base designing of the third queue of EID and selecting of conception of large-scale Kashagan field's development.
Could you please make known us in detail the hydrocarbon export from the field?
The work on development of transport infrastructure are carried out on three directions:
- Existent transportation choices
- New Russian transportation choices
- Transcaspian transportation system
According to Kashagan project development plan the oil production will increase from 21 mln. tons for a year (450.000 bpd) in 2008-2010 to 56 mln. tons for a year (1200.000 bpd) in 2015-2041.
At that moment 6 prospecting, 6 appraisal and one production well were drilled.
The using of drilling rigs (DR):
- Floating drilling barge "Sunkar"
- Self-lifting DR "Astra"
- Land DR at artificial islands
Prospecting
According to Prospecting Program (1998-2004) all from the planned 6 prospecting wells is drilled. The prospecting wells provided with positive results and the discovering of hydrocarbon was occurred:
- June 30, 2000 at Kashagan;
- September 3, 2002 at Kalamkas-sea;
- August 10, 2003 at South-Western Kashagan;
- September 2, 2003 at Aktota;
- September 10, 2003 at Kayran.
Advance hydrocarbon reserves
According to results of prospecting and estimations the advance geology reserves of oil fields make 5705 mln. tons, extracted - 1917 mln. tons, including Kashagan reserves - 4,8 and 1,6 bn. tons. The general estimation charges (investments) in the project will make $54.850 mln. of which by about $27.250 mln. will be capital outlays.
At present, the staff of Agip KCO is 3.500, including 1.800 employees of project's operator. There is suspected the increasing of employees' number up to 12.000.
A number of vessels modifies in depend on operation type and season and totally is 60.
Presently, there is continued the works on working designing, purchasing of equipment and common construction operations at Western Eskene.
On May 4, 2005 there held in Astana the ceremony of transaction completion by selling of BG Group Plc. share in the North Caspian project. In result the NC KMG got the half of sold BG Group Plc. share in project (8,33%).
KMG entrance to the project is fulfilled on parity beginnings with the other participants that does not consider any privileges and "discounts" regarding the other contractors. Furthermore, non of the participants of transaction do not have any tax privileges and preferences from State within the frame of bargain on selling of BG Group Plc. share.
The cost of share participation offered for selling was defined in the market base and the getting price on behalf of KMG does not differ from paid by contractor companies that bought the other part of BG Group Plc. share.
As you aware BG Group Plc. due to selling of its own share to partners on project earned by about $1,8 bn. The rate of share getting for Kazakhstan side made the half of the sum that includes the cost of the share (8,33%) and the present outlays on project of BG Group Plc. since concluding of purchasing and sail contract with contractor companies.
Could you please call the priority directions of oil transportation? Does the present transport system satisfy KMG, which new projects will be realized in the nearest time and future?
Today, with the increasing of oil production volumes there is a necessity of oil transport infrastructure development. So, Kazakhstan fulfills active work regarding the projects of development of existent transport systems and elaborates the projects of new export routes.
We should note that our country keeps the multiple view directions of oil and gas export and carefully follow after all possibilities both having and perspectives.
The main part of Kazakhstan's oil export is the Russian direction Atyrau-Samara oil pipeline through which in 2004 was transported 15 mln. tons of oil, regarding the pipeline of the Caspian Pipeline Consortium via which in 2004 was transported more than 22 mln. tons of oil.
At present, Kazakhstan's oil transport system satisfies the requirements of transportation in capacity as well as export directions. In future with taking into account the elaborating projects the system's capacity will rise due to increasing of production volumes.
Taking into consideration the growth of oil production in the West Kazakhstan the KMG mutually with the Russian "Transneft" implements the investigations by increasing of Atyrau-Samara oil pipeline power up to the level of 25 mln. tons for a year. At the same time mutually with the other shareholders of CPC project the Kazakhstan fulfills the work regarding the increasing of CPC oil pipeline's capacity that planned to multiply up to the project level 67 mln. tons for a year.
Regarding the new projects then the one from the strategy important directions of oil export pipeline that Kazakhstan plans to commission in the nearest time is the Kazakhstan-China oil pipeline. As it aware the initial phase of the project became the construction and successful commissioning of the pipeline in 2003 connecting Kenkiyak and Atyrau. There are two stages of operation, in accordance to plans on construction of Kazakhstan-China oil pipeline. The first is the construction of oil pipeline from Atasu to Kazakhstan-China border in Alashankou region with power of 10 mln. tons for a year with further expansion up to 20 mln. tons for a year.
The second stage is construction of Kenkiyak-Kumkol-Atasu oil pipeline with 20 mln. tons for a year.
As a resources of the first stage there are accepted the oil produced in the South Turgay basin and maybe the oil from Siberian fields. The completion of Atasu-Alashankou construction is planned to the end of 2005 and by the middle of 2006 there is suspected the beginning of oil export from China. The second stage, after completion of Kenkiyak-Kumkol-Atasu construction there is planned the oil pumping extracted in the West Kazakhstan including the oil from the Caspian and Kumkol.
Furthermore, we plan to develop the Kazakhstan's oil transportation project from Aktau to Baku and further via Baku-Tbilisi-Ceyhan (BTC).
In the long-term perspectives Kazakhstan does not exclude the realization of Iranian direction for Kazakhstan's oil transportation. Now, there is fulfilled the joint investigations on project construction of Kazakhstan-Turkmenistan-Iran oil pipeline where KMG, Total, Japanese National Oil Corporation and INPEX take part.
We kindly ask you to tell us about the results of next negotiation on Kazakhstan's oil shipments via Aktau-Baku-Tbilisi-Ceyhan…
The negotiation regarding the project is carried out with KMG, SOCAR, pipeline company BTC Co. and foreign investors participation. Presently there is fulfilled the coordination of Intergovernmental agreement's content.
KMG operation directed for creation of conditions for transportation of Kazakhstan's oil via Aktau-Baku and further via BTC.
We should note that the four participants of the North Caspian (Kashagan) project - ENI, Total, INPEX and ConocoPhillips in 2002 purchased the 15% of share participation in BTC pipeline project. In accordance to protocol decision of working conference of intergovernmental commission on oil and gas pipelines export relations, negotiation groups of KMG and SOCAR are executed the operation by preparation of Treaty between the Republic of Kazakhstan and the Republic of Azerbaijan on assistance and supporting of oil transportation via the Caspian for transit shipments in the territory of the Republic of Azerbaijan.
After coordination of agreement project at the level of working group the document will be submitted to Government of both countries. This is difficult agreement because the speech is the creation of new system "Aktau-Baku" and its further connecting to BTC. After signing of the contract, there will be signed the agreements with the participating governments. The power of pumping system will make more 25 mln tons of oil for a year. At the first stage there will be shipped up to 7,5 mln. tons of oil. The new system will be constructed by the time when the oil will go from Kashagan. There will be created the separate company for control by system Aktau-Baku. KMG, companies - shareholders of the North Caspian project (Kashagan) and other interested oil companies' participation are expected in the stock capital of stated company.
Which ecology criteria does KMG follow in selecting of ecology mutual relation with foreign companies in the Caspian?
I would like to mention that KMG under the fulfillment of offshore oil operations at whole aquatory of the Kazakhstan part of Caspian follows to the principal of "zero throw". I.e. there is no throwing down to the sea, and all processing and domestic wastes, including atmospheric precipitates is utilized in onshore.
Nature safety legislation of the Republic of Kazakhstan is considered the measures by protection of ecology of the country under fulfillment of oil operations, including in the sea.
National company as each bowels users in its activity based on criteria set in the Law of the Republic of Kazakhstan "About safety of environment", "About ecology expertise", "About special protected natural territories" and others.
By these laws are set the special ecology requirements under carrying out of oil operations. As I have already mentioned the Parliament of Kazakhstan considers the Law project of the Republic of Kazakhstan "About Product Sharing Agreements (contracts)" under fulfillment of oil operations in the sea".
With taking into account the territory of oil operations fulfillment the given project consists one more important feature. It is the creation and realization of relations by presenting of right for bowels using on the terms of PSA in the Kazakhstan part of the Caspian and Aral sea cannot be fulfilled without presenting to bowels users of warranties by providing of ecology safety in the given zone.
The Bill also considers the contractor's obligation by clearing of pollution territories where fulfilled the operation on PSA, liquidation by completion of all constructions, installations and others in the sea excluding the passing into ownership of the Republic of Kazakhstan.
So, the Bill difference from others considers more efficient and effective measures by protection of country's ecology during the implementation of oil operations. At the same time the Kazakhstan's government is obliged with the right for stopping and refusing of realizing of separate operations on behalf of contractors that is the major for providing of ecology protection.
P.S. During journal's making up it became known that within May negotiation of SOCAR and JSC "NC "KazMunayGaz" at working group level coordinated the text of intergovernmental contract on oil transportation via Aktau-Baku and it was submitted to Governments of two States for consideration.
Thanks for your interview.