Embassy of Kazakhstan

“Energy Commissioner, Andris Piebalgs, today welcomed the fact that an agreement has been reached between the members of the Kashagan consortium and the authorities of Kazakhstan. The resolution of this dispute will allow the development of the Kashagan oil field, the largest oil discovery in more than 30 years, to proceed at the quickest pace possible,” he was quoted as saying.

“Such progress should also help to ease world energy markets at a time of sharply increasing energy demand”.

The members of Agip KCO consortium on January 14 signed a new memorandum of understanding with the Kazakhstan’s government. The long term negotiations with consortium members resulted in amendments made to the PSA on the North-Caspian Project. Under the newly amended PSA, KazMunaiGas obtained the status of the major shareholder with 16.81% share along with Eni, Total, ExxonMobil, Shell. The operator of the project will be a new company that will be created by all consortium members, taking into account the bigger role of KazMunayGas. Commercial production at Kashagan is scheduled to start in 2011.

AGIP KCO was created to implement the North-Caspian project after a respective production sharing agreement (PSA) for the period of 40 years was signed in 1997. Under PSA the licensed area will also include the three oil-bearing structures Kalamkas, Aktoty, Kairan in addition to Kashagan.

These 4 structures consist of 11 marine blocks, which occupy an area of about 5,600 square kilometers. The recoverable oil reserves at Kashagan are estimated at a minimum of 7-9 billion barrels and the total oil in-place - at 38 billion barrels.

Agip KCO is owned by Eni (the single operator of the North-Caspian Project), Total, ExxonMobil, Royal Dutch/Shell which have 18.52% each, ConocoPhillips - 9.26%, Inpex and KazMunayGas - 8.33% each.