Russian Lukoil acquired a 50% stake in the Kalamkas Sea project from KazMunayGas (KMG), the state-owned oil and gas company of Kazakhstan. The deal, valued at $200 mn, was finalized in September 2023, following initial agreements made in February 2023. This acquisition grants Lukoil participation in the exploration and production across three key oil fields: Kalamkas Sea, Khazar, and Auezov.
The financial arrangement saw Lukoil paying $50 mn for the stake on September 21, 2023, with an additional $100 mn payment contingent upon meeting specified benchmarks. This transaction detail revealed in KMG's annual report, includes KMG’s accounting of a potential $29 mn additional reward as a financial asset. The investment mirrors the allocation of funds towards the joint venture on a quota-share basis.
Kalamkas-Khazar Operating, the operational entity for the project, reported a financial position with $521,288 in losses and $15,661 in revenue from January 1 to September 11, 2023. The entity’s financial statements show assets and liabilities valued at $45.8 mn and $13.4 mn, respectively.
Exploration and production timeline
The exploration efforts at Kalamkas Sea and Khazar oil fields were initiated in September 2021, as announced by President Kassym-Jomart Tokayev, in response to the anticipated decline in oil reserves and production by 2030. The project, with an initial investment estimate of $5 bn, aims to augment Kazakhstan’s oil production capacity.
In February 2023, KMG and the Ministry of Energy formalized an enhanced model contract for oil production in these fields, specifying a $32 mn subscription bonus, $6 bn in direct investments, and the creation of around 2,000 jobs. Oil production by Kalamkas-Khazar Operating in the Caspian Sea is expected to commence between 2028 and 2029, focusing on the use of Kazakhstan-manufactured goods, works, and services.
Extended industrial cooperation
The agreement is part of broader industrial cooperation between Kazakhstan and Russia, which includes 29 projects with a total value of $9 bn agreed upon in June 2023. This cooperation encompasses over 100 industrial projects valued at more than $22 bn, with direct investments from Russia to Kazakhstan nearing $20 bn over 17 years, and Kazakhstan’s investments in Russia around $6 bn.
Additionally, KMG and Lukoil are engaged in multiple joint projects beyond the Kalamkas Sea project, including stakes in the Zhenis and Al Farabi oil fields. The partnership is exploring the potential for a consortium between KMG Engineering and Lukoil Engineering to enhance engineering and R&D support within their joint projects.
KMG scheduled an open-door day in April 2024 for its significant oil and gas projects, including Kalamkas/Khazar, to present procurement plans to domestic businesses.
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