The international financial crisis is likely to delay a planned joint venture between Russia and Kazakhstan, according to Kazakhstan’s energy and mineral resources Minister Sauat Mynbayev. The 2007 agreement provided for the supply of natural gas from the Karachaganak field in Kazakhstan to Gazprom’s Orenburg processing plant. Processed gas will be then delivered back to Kazakhstan and only a small quantity will be directly exported by Gazprom. However, in view of the international economic turmoil, the shareholders of the Karachaganak field operator requested the suspension of future investments - including the JV in question - pending a final decision in the second half of 2009.
Today, the Orenburg gas processing plant (GGP), located in Russia at a distance of 160 km from the Karachaganak field, is mainly supplied with gas from the local Oblast gas and condensate field developed in 1997. However, production from the Oblast field is in decline and therefore the plant currently operates at a fraction of its nominal - 37.5 bcm per year - capacity. In 2007 and 2008, Kazakhstan supplied to Orenburg GGP 7.4 and 8 bcm respectively. Deliveries of extra gas from the Karachaganak field of the Republic of Kazakhstan will enable Orenburg GPP to reach its maximum operating capacity.
The Karachaganak development project consists of four stages; in the current phase investments of up to USD3.0 billion are planned for drilling 122 oil-gas wells to increase oil production to 16 million tons per year and natural gas production to 38 bcm per year. 52% of that increase will be achieved using reverse pumping technologies. As a result, natural gas supply to the Orenburg GGP can be raised to 16 bcm. When the JV project will be fully implemented, the Orenburg plant is planned to receive increased quantities from the Karachaganak field; according to the present timetable, supplies are expected to reach 10 bcm in 2012 and will eventually peak at around 15 bcm. However, due to the recent developments, this target will probably be reached at a later date.
According to the proposed plan, the JV company will sign a long-term agreement for processing Karachaganak natural gas amounting to 15 bcm per year. Russia will be represented by Gazprom and Kazakhstan by KazMunayGas. The JV is planned to become the owner of the Orenburg GPP with each partner holding 50% of the shares.
Karachaganak is the world's largest oil and gas field with reserves estimated at over 1.2 billion metric tons of oil and condensate and 1.35 tcm of gas. The field is run by “Karachaganak Petroleum Operating BV” - jointly owned by BG (32.5%), Eni (32.5%), Chevron (20%) and Lukoil (15%) - under a 40-year production sharing agreement signed in 1997.