BG and its partners in the North Caspian Sea Production Sharing Agreement (PSA) have declared the commerciality of the Kashagan discovery, in conjunction with KazMunaiGas (KMG), which represents the Government of the Republic of Kazakhstan.

The project is operated by AgipKCO, on behalf of a consortium comprising BG, ENI, ExxonMobil, Inpex, Phillips, Shell and TotalFinaElf.

The consortium has undertaken an extensive appraisal programme, which has also included major studies into health, safety and the environment, engineering and transportation. On completion of the appraisal work to date, the estimate of recoverable reserves is between seven and nine billion barrels in a depletion case. With re-injection of some of the associated gas, it is possible that the range of recoverable reserves might become nine to 13 billion barrels. These figures will, however, be revised on the basis of further studies and data acquisition, as well as on an assessment of the feasibility of gas re-injection into the reservoir.

BG Group Chief Executive Frank Chapman said:

"I am delighted with the progress we have made towards appraising and commercialising the Kashagan field. This is one of the largest and most exciting hydrocarbon discoveries in many decades. It is also the most significant hydrocarbon discovery in Kazakhstan, and will make a key contribution to the development of the country's economy and future prosperity."

The Contracting Companies will continue to explore other structures in the North Caspian Sea contract area. In 2002, drilling will commence on Kalamkas, and in 2003 on Kashagan South West, Aktote and Kairan.

The shareholdings in the North Caspian Sea PSA are ENI (operating through AgipKCO with an interest of 16.67%), BG Group (16.67%), ExxonMobil (16.67%), Inpex (8.33%), Phillips (8.33%), Shell (16.67%) and TotalFinaElf (16.67%).