The Republic of Kazakhstan has entered an agreement to acquire a 10% stake in the Karachaganak gas-condensate field in north-west Kazakhstan.
The Karachaganak project partners, including BG Group, Eni, Chevron International Petroleum and Lukoil, will transfer 10% of their rights and interests in the Karachaganak final production sharing agreement (FPSA) to KazMunaiGas, Kazakhstan’s state oil company.
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Under the deal, the pre-tax consideration to the project partners is $3bn, and the companies will get a $1.5bn cash pre-tax consideration from Kazakhstan in exchange for a 5% interest in the FPSA.
The companies will get a further $1.5bn pre-tax consideration, including $500m cash and a $1bn non-cash consideration, for transferring a second 5% interest in the FPSA to KazMunaiGas.
The project partners will be responsible for paying tax of $1bn on the total consideration, and will lend KazMunaiGas $1bn to finance the agreement.
The $1bn loan will be repaid over a three-year period from the proceeds of KazMunaiGas’s share of oil and gas sales from its 10% interest.
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By GlobalDataBG Group executive vice president Ashley Almanza said the deal provides the foundation for realising the vast remaining potential and value of the Karachaganak field.
"Karachaganak is estimated to have hydrocarbons initially in place of nine billion barrels of condensate and 48 trillion cubic feet of gas – to date less than 10% of that resource has been produced," said Almanza.
Transfer of the stake in the Karachaganak project to KazMunaiGas will take place on 30 June 2012.
On completion of the transaction, BG Group will hold a 29.25% stake in the project, while Eni, Chevron and Lukoil will hold 29.25%, 18% and 13.5%, respectively.
BG Group and Eni will continue to jointly operate the Karachaganak project.
