Kazakhstan

Karachaganak

Karachaganak, discovered in 1979, is one of the world’s largest gas and condensate fields. Located in north-west Kazakhstan, it holds estimated hydrocarbons initially in place of 9 billion bbls of condensate and 48 tcf of gas, with estimated gross reserves of over 2.4 billion bbls of condensate and 16 tcf of gas.

Production from the Karachaganak field began in 1984. Since the signing of the Final Production Sharing Agreement (FPSA) in 1997, the Karachaganak partners have made substantial investment in wells, facilities and pipelines. In addition to its size, Karachaganak presents the operators with formidable challenges due to extreme climate swings
(+/- 40 degrees centigrade) and the requirement to reinject high pressure sour gas. BG Group’s share of production from Karachaganak in 2010 was 37.8 mmboe.

The FPSA envisaged a phased development programme. Phase 2, which came onstream in 2004, involved investment to enhance the existing facilities, construction of new gas and liquids processing and gas injection facilities, work-over of more than 100 wells, construction of a 120 MW power station and a new 650 kilometre pipeline to connect the field to the CPC pipeline at Atyrau.

Most of the liquids are exported to the west (78% in 2010), with some oil and all raw gas sold locally and into Russia. Since 2004, oil exports are mainly via the CPC pipeline and, since 2006, additional oil exports are routed via the Atyrau Samara pipeline leading into the Russian Transneft system, enabling sales to achieve international prices.

In June 2011, a fourth liquids stabilisation train commenced operation. The project increases stabilisation capacity by 2.57 million tonnes of condensate a year (mtpa) and will increase high-margin oil volumes to Western markets to over 10 mtpa.

During 2009, 3D seismic data was acquired across the Karachaganak field. The detailed 3D survey is expected to yield considerable benefits as the Karachaganak field enters future stages of development.

In relation to the next phase of development, BG Group and its partners have initiated discussions with the Ministry of Oil and Gas.

Karachaganak export routes and capacity

Caspian Pipeline Consortium (CPC)

The CPC was formed to build a pipeline system to transport oil from western Kazakhstan to the Black Sea near Novorossiysk in Russia. The pipeline system, which commenced operations along its full 1 500 kilometre length in 2001, consists of a new-build line, new marine terminal facilities near Novorossiysk and an upgraded pipeline. The system currently has a design capacity of 28.2 mtpa.

BG Group has a 2% equity share in the pipeline but is entitled to 2.75 mtpa (55 000 bopd) of capacity (around 10% of the total) which is used to transport liquids from Karachaganak. Karachaganak, operating via the Karachaganak Petroleum Operating Company (KPO), began delivering liquids into CPC in 2004. In 2010, liquids from Karachaganak yielded 7.1 million tonnes gross (BG Group 2.0 million tonnes).

In December 2010, the CPC shareholders sanctioned the CPC expansion project which will more than double capacity in three phases, with completion expected in 2015. Total capacity will increase to 67 mtpa. Following expansion, BG Group’s entitlement will rise to 3.0 mtpa
(60 000 bopd). BG Group and the Karachaganak partners also have the opportunity to capture capacity unused by other shareholders. The expansion project includes the addition of ten pump stations in Russia and Kazakhstan, six crude oil storage tanks near Novorossiysk and a third single-point mooring at the CPC Marine Terminal.