Agip And BG Exploration And Production Limited Farm Out Karachaganak Stake To Texaco

Agip S.p.A. (the Exploration and Production company of Eni) and BG Exploration and Production Limited announced today that Texaco has acquired an interest in the giant Karachaganak oil and gas condensate field.

Under the terms of the agreement, Texaco will gain a twenty per cent share in the project.

BG Exploration and Production Limited, Managing Director, Special Projects, Eddie Walshe, said: "Together with Agip we have for some time been looking to strengthen our partnership and we believe that farming-out a portion of interests to Texaco achieves that end. Texaco has many strengths as a company and also adds an additional transnational element to the partnership."

Massimo Nicolazzi, Agip's Senior Vice President and Chief Negotiator, added: "Agip and BG Exploration and Production Limited were among the first western companies to take a serious interest in Kazakhstan at the end of the Soviet era. We together made a long term commitment to the country in 1992 and are now involved in three major projects there. Inaddition to Karachaganak, we are taking part in the Caspian Pipeline Consortium (CPC), and in the Caspian Sea Exploration Consortium.

"We are glad that a company of such importance as Texaco has decided to join Agip and BG Exploration and Production Limited in their efforts to help the economic development of the entire region."

Karachaganak is a giant oil and gas condensate field, close to the Russian border, in the Uralski region of West Kazakhstan. The maximum forecasted annual productions are around 700 billion cubic feet of natural gas and 78 million barrels of oil and condensate. The field holds remaining reserves of over two billion barrels of oil and condensate, plus 18 trillion cubic feet of gas.

In 1992 BG Exploration and Production Limited and Agip secured exclusive rights to negotiate for the further development of the partially developed field.

A Production Sharing Principles Agreement (PSPA) was signed in March 1995 between Agip, BG Exploration and Production Limited, Gazprom, SHC KazakhGas and the republic of Kazakhstan, with BG Exploration and Production Limited, Agip and Gazprom acting jointly as the Contractor to undertake the provisions of the PSPA.

Operations in the field are controlled by the Karachaganak Operating Structure (KOS), a joint management team based in Aksai. Negotiations are progressing to convert the PSPA to a Production Sharing Agreement.

The planned development of the Karachaganak field moved a step closer last year, with the signing of the Caspian Pipeline Consortium (CPC) restructuring and shareholders agreement which will enable work to start on the construction of a pipeline to transport oil from Kazakhstan to the Black Sea.

The Caspian Sea Exploration Consortium, in which Agip and BG Exploration and Production Limited each have an interest, has completed a major seismic survey of the Kazakh sector of the Caspian Sea.