10:13 GMT +325 September 2018
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    Russia and Kazakhstan Expand Energy Cooperation

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    MOSCOW, July 7 (Igor Tomberg, expert, for RIA Novosti). As presidents Vladimir Putin and Nursultan Nazarbayev met in Astana, several energy agreements were signed in the presence of the Russian and Kazakh leaders.

    The agreements deal with a joint venture based around the Ekibastuz power plant, and granting Russia's company Rosneft the right to explore the Kurmangazy deposit, part of the Caspian oil shelf under Kazakhstan's jurisdiction.

    Kazakhstan's President Nursultan Nazarbayev described the document as "a major project of world significance". Russian president Putin agreed with his Kazakh opposite number's assessment, noting that "joint investments will total 22-23 billion dollars", and expected revenues will be 50 billion dollars. He also said that in the course of the next few years between 200 and 250 million dollars will be invested in the energy sector. After calling the signing of the documents the crowning of a significant effort, the Russian president recalled that work on the project had been going on since 2002.

    Rosneft head Sergei Bogdanchikov, Kazakhstan's Energy Minister Vladimir Shkolnik and NK Kazmunaigaz head Uzabak Karabalin signed the production-sharing agreement on Kurmangazy in the Caspian Sea between OOO RN-Kazakhstan, the republic's energy ministry, and AO Sea Oil Company KazMunaiTengiz.

    Under the protocol, exploration and production on Kurmangazy will be done on a parity basis by authorised organizations of the two countries - companies KazMunaiTengiz and RN-Kazakhstan. The duration of the Kurmangazy agreement is 55 years. In the joint venture Russian company Rosneft owns 25%, and KazMunaiGaz, 50%. The remaining 25%, as Putin and Nazarbayev agreed on Wednesday, may be bought out by Russian company Zarubezhneft.

    As is noted in a press release, the probable recoverable oil reserves of Kurmangazy are estimated at about 1 billion tons. Plans allocate 2 years for exploration of the deposit, 3 years for assessing and announcing a commercial discovery, and 4 to 5 years for construction of field facilities and initiation of production. It is only after this that commercial development will begin. Output is contemplated at 60 million metric tons a year.

    Principal receipts from the project to Kazakhstan's budget will start coming after commercial development is launched. Throughout the entire period of development, total payments to budgets of different levels may be as high as $31 billion.

    The signing of major documents marking the launch of serious energy projects in Central Asia has also become a tradition at meetings within the Shanghai Cooperation Organisation. Last year, LUKoil signed a production-sharing agreement on the development of the Kandym block of gas and condensate deposits and the Khauzak and Shady fields in the Bukhara-Khiva region of Uzbekistan. The contract had been in the works since 2001 and the figures it handles run into billions. Uzbek geologists estimate industrial recoverable gas reserves of the contract territory at 283 billion cubic meters and 8 million metric tons of condensate. Continued exploration and full-scale development of the block may more than double its reserves in this category. Implementation of the project will require more than $1 billion in investments.

    Interestingly enough, LUKoil concluded the contract in Tashkent, as part of Putin's visit to sign an agreement on strategic partnership and other documents with Uzbekistan's President Islam Karimov, and to attend negotiations with heads of Shanghai Cooperation Organisation (SCO) member-countries.

    In that way, although the problems of security, fight against terrorism and narcotics officially dominate the agenda of SCO summits, the oil and gas theme is always present.

    The present agreement on Kurmangazy has an obvious international aspect not confined to the fact that the signing has coincided with the summit. India's joining the SCO as an observer will have as one of its results the invigoration of Delhi's energy policy in the region. Today India itself is able to meet only 30% per cent of its oil requirements. Over the past 10 years oil production in India has been growing at about 2.4% a year, and consumption at 6.1%.

    No wonder the Indians are increasingly talking of joint projects with Rosneft and their list is growing all the time. These are a stake in Yuganskneftegaz, joint development of the large Vankor deposit, and participation in the Kurmangazy project on the Caspian shelf. During his February visit to Moscow India's Oil Minister Shankar Aiyar likewise raised them. That Delhi is interested in Kazakhstan's oil and gas projects - including Kurmangazy - is evident from the fact that Aiyar arrived in Moscow from Kazakhstan.

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