BG Group and partners today agreed the terms of the Phase III Karachaganak Gas Sales Agreement (GSA) with KazRosGaz, a joint venture between Gazprom and KazMunaiGaz.
The agreement, which is subject to approvals, sets out the commercial terms governing the sale of gas over a 15 year period commencing during the fourth quarter of 2007. Volumes under the agreement will increase to 16 billion cubic metres per annum (bcma) following completion of the US$8 billion Karachaganak Phase III expansion, which is expected onstream in 2012.
Mark Carne, BG Group Executive Vice President, Europe and Central Asia said:
“This agreement is a significant milestone in the continued development of the giant Karachaganak field in Kazakhstan and represents the commercialisation of over 7 trillion cubic feet of gas. It secures enhanced value for the Karachaganak partners and the Republic of Kazakhstan. Additional gas sales resulting from the expansion will also enable the venture to increase liquids production for export to high value western markets.”
Background
The Karachaganak Phase III expansion project is due to be sanctioned in 2008 and will see gas and liquids sales increase to 16 bcma and 16.5 million tonnes per annum (mtpa) respectively. Currently 8 bcma of untreated Karachaganak gas is exported to the Orenburg processing facility in Russia. The expansion of the Orenburg facility to accommodate the increased volumes as a result of Phase III will be completed by the KazRosGaz joint venture.
Notes to Editors:
BG Group plc is a global natural gas business. Active on five continents in 25 countries, it operates four business segments – Exploration and Production, LNG, Transmission and Distribution and Power.
BG Group has been active in Kazakhstan for more than a decade. It is the joint operator of the Karachaganak gas condensate field in north-west Kazakhstan in which it owns a 32.5 per cent interest. Karachaganak holds estimated gross reserves of over 2.4 billion barrels condensate and 48 trillion cubic feet of gas. The company also holds a 2 per cent interest in the Caspian Pipeline Consortium oil pipeline which transports oil from western Kazakhstan to the Black Sea.
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There are matters discussed in this media information that are forward looking statements. Such statements are only predictions and actual events or results may differ materially. For a discussion of important factors which could cause actual results to differ from the forward looking statements, refer to the Company’s annual report and accounts for the year ended 31 December 2006. The Company does not undertake any obligation to update publicly, or revise, forward looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
Cautionary note to US investors - The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. In this announcement we use the term “undeveloped gas” and in Notes to Editors we use the term “indicated gross reserves” that the SEC's guidelines strictly prohibit us from including in filings with the SEC. US investors are urged to consider closely the disclosure in our Form 20-F, File No. 1-09337, available from us at BG Group, 100 Thames Valley Park Drive, Reading RG6 1PT. You may read and copy this information at the SEC's public reference room, located at 100 F Street NE, Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. This filing is also avail able at the internet website maintained by SEC at http://www.sec.gov
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