Page 13 - FSUOGM Week 27 2019
P. 13
FSUOGM INVESTMENT FSUOGM
Eni nears deal for Caspian block
KAZAKHSTAN
IOCs are looking at offshore Kazakhstan in part thanks to changes in taxation.
ENI is inching closer towards securing a nal contract to develop an o shore block in Kazakhstan.
The Italian energy major said on July 5 it had signed a “protocol of direct negotia- tions” with Kazakhstan’s national oil company KazMunayGas (KMG) and its energy ministry on the issue of subsoil rights to the Abay block in the Caspian Sea. e area lies 60-70 km o the Bozashi Peninsula in waters less than 10 metres deep.
KMG indicated that the partners had made progress in talks in a separate statement. It said they had agreed on the payment of a signature bonus to Kazakh authorities once a produc- tion-sharing agreement (PSA) for Abay is nal- ised, as well as on the use of local content at the project.
Sources who have spoken with FSU OGM estimate that the contract between Eni and KMG is worth 14bn tenge ($36.5mn). Under the deal, the partners will drill one exploration well meas- uring 2,500 metres in depth and collect 700km of 2D seismic data.
Abay is estimated by KMG to hold 2.8bn bar- rels of oil in Cretaceous and Jurassic rock layers.
Kazakhstan has been trying to get an investor on board to develop the block for more than a dec- ade. Norway’s Equinor signed a heads of agree- ment (HoA) to join the project in 2011 but quit talks two years later. India’s OVL and Denmark’s Maersk Oil were then invited to take part, but declined.
Following changes to Kazakhstan’s tax code that can o er some o shore projects scal relief, Eni entered into joint operating and carrying agreements with KMG to explore the site ear- lier this year. A carry deal is when one partner, usually an international oil company, covers a greater share of exploration and development costs in return for a larger share of cost recovery funds.
Eni and KMG will operate Abay through the same 50:50 joint venture they set up to develop the neighbouring Isatay block in 2017. e pair have not said when they expect to enter a PSA for the new block.
Eni’s other interests in Kazakhstan include stakes in the onshore Karachaganak gas conden- sate eld and the other Kashagan oil project. It currently produces 170,000 barrels of oil equiva- lent per day in the country.
Week 27 09•July•2019 w w w . N E W S B A S E . c o m P13
