"In the near future following the agreement with the Gazprom our experts will go to Orenburg, the trip's results will be reported to the two countries' governments to enable them to take a coordinated decision", Uzakbai Karabalin, president of the KazMunaiGaz (Kazakhstan's oil and gas) joint stock company, told a press conference in Atyrau (town in the south of Kazakhstan).
He said that "Kazakhstan's government tasked them to evaluate all advantages and disadvantages of the project, including the issues of employment and budgetary receipts".
At the same time, the KazMunaiGaz president specially emphasized that "the Orenburg plant has been operational for a long time, it is not a new enterprise, therefore its technical assessment should be done at the appropriate level".
Earlier, Alexander Ryazanov, deputy chairman of Gazprom's board, presented the proposal made by Gazprom to the Kazakh side on establishing a joint venture on the basis of the Orenburg GPP.
"Our proposal implies the comprehensive use of the available Orenburg-based gas processing facilities, capable of processing up to 40 billion cubic meters of gas", said Mr. Ryazanov.
In Gazprom's assessment, processing additional 8 billion cubic meters of gas, which can be supplied to Orenburg from the Karachaganak gas field (Kazakhstan), "will require, at least, three processing units and two pipelines to Karachaganak, the set of processing equipment that we are ready to provide (to the future joint venture)".
Besides, according to Mr. Ryazanov, the joint venture could use the infrastructure of the Orenburg GPP, and "a project's infrastructure is always expensive".
"If we now share the Orenburg plant's property, it will be one of those cases when Kazakhstan's capital comes toRussia", he pointed out.
At the same time, Kazakhstan considers the option of building a gas processing plant capable of processing up to 10 billion cubic meters of gas directly at the Karachaganak field.
Gazprom's experts estimate construction of such plant at approximately $1.3 billion, the construction time being five years.
"We believe it is rather expensive and currently not market-effective", Mr. Ryazanov pointed out.
According to him, construction of the plant in Karachaganak can only be cost-effective provided that no less than 90% of the gas will be sold on the western market, which does not lack gas today.
According to Gazprom's assessment, production costs of processing Karachaganak's gas at the Orenburg GPP "are certainly much lower and the production is much more effective requiring no significant expenditures".
"Development and upgrade of the Orenburg GPP for processing extra 8 billion cubic meters of gas is estimated by our experts at $300-320 million, and it can be done very quickly approximately within 1.5-2 years", stated Mr. Ryazanov.
At the same time, he admitted that some other issues were involved in choosing the place for processing Karachaganak's gas. "It is understood, when the leader of the region, where Karachaganak is situated, wants to build the plant there, because he wants to create a taxation base and jobs", said Mr. Ryazanov.
"I believe that a sound agreement convenient for everybody will soon be reached", concluded Mr. Ryazanov.
In 2002, Gazprom and Kazakhstan's KazMunaiGaz established a joint venture KazRosGaz, which purchases crude gas from the Karachaganak field and processes it at the Orenburg GPP. Processed in 2003 were 5.5 billion cubic meters of gas, the planned volume for 2004 being 7 billion cubic meters. The Kazakhstan-based Karachagan gas field approaches the third phase of development assuming increase in gas production by approximately 8 billion cubic meters of gas a year.
