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Energy: Russian Łukoil enters Kazakhshelf of the Caspian Sea
Author:Mariusz Dasiewicz
The Russian Łukoil Group is close to signing a contract with Kazakh monopoly KazMunaiGaz on the geological examination of the Enis block at the Kazakh Kaspian Sea Shelf. It is another investment of Łukoil in the Caspian Sea and the expansion of activity in Kazakhstan. The project assumes that the geological work on the Zenis will take up to nine years. Then you'll know if and how much oil there is. As regards the prospect of Łukoil being involved with this joint venture, much will depend on the tax policy of the Kazakh authorities.
The Zenis block lies in the southern part of the Kazakh shelf. The depth of the sea is 75-100 m. There are other joint ventures of Łukoil and KazMunaiGazu nearby: Central deposits (Łukoil and Gazpromnieft have 25 percent shares) and Chwalinskoje deposits (Łukoil has 50 percent). The distance of the Zenis block from the shore is 80 km and from the port of Aktau – 180 km. It has an area of 6.8 thousand sq km.
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Łukoil talks with KazMunaiGaz lasted a long time. Initially, Łukoil assessed investments in geological research at $270 million. The Russian company is ready to invest $350 million in the survey of the block, and in the event of the discovery of the oil deposit, the compensation of Łukoil is to be received in nature, in the form of the raw material being mined," said Wagit Alekpierov, the head of the company. The shares in the joint venture will be divided equally between Łukoil and KazMunaiGaz. For just entering the project, the Russians will charge $5 million for "inscription". According to Alekpierov, the geological research phase will take 7-9 years. According to experts, the exploitation of Wienis can be profitable even with small resources provided the tax system changes. In 2011-2012, when oil prices peaked, the Kazakhstan authorities changed the tax system for new projects to less favourable for investors. As a result, a number of Western companies resigned from engaging in work on the Kazakh shelf. Even if the French Total decided not to invest in the work on the Females.
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Kazakhstan has recently begun to put pressure on the development of shelf projects, which involves falling mining in major land deposits. In Kazakhstan, Łukoil has shares in three existing oil projects: Tengiz (5%), Karachaganak (13.5%) and Kumkol (50%). In total, Łukoil accounts for about 3 million tonnes of oil produced annually in Kazakhstan. In recent years, Łukoil has only been active in the Russian part of the Caspian Sea, where he has received considerable relief from the government. In total, since 2006, Łukoil has already invested more than $10 billion in Caspian projects.
Source: Warsaw Institute. Photo: Łukoil.
