KAZAKHSTAN - EmbaMunaiGaz.

Producing 55,000 b/d (up from 40,000 b/d in mid-2002), the EMG association has the oldest fields in Kazakhstan. Their first oil went on stream in 1911. Together with older ones in Azerbaijan, they used to be the focus of the Soviet Union's oil production until the fields of western Siberia went on stream in the 1960s. The privatisation of EMG has been suspended. A tender for 60% at end-March 1997 was cancelled as EMG's managers, part of a powerful oil lobby, blocked the sale plan.

To cut costs, KazakhOil wants to merge EMG with TengizMunaiGaz (TMG), which produces 25,000 b/d. TMG is in charge of the early part of Tengiz field which was found in 1979 and was developed by the Soviets (see OMT). TMG was taken over by KazakhOil when this was created in March 1997.

KarazhanbasMunai is producing 30,000 b/d (up from 25,500 b/d in mid-2002), from the Karazhanbas field on the Buzachi Peninsula. The field in 1996 had 1.6 bn barrels of oil and 67 BCF of gas in place, of which 686m barrels of oil and 28 BCF of gas were said to be recoverable. But the oil is very heavy, 18-21[degrees] API with a viscosity of 195-300 CP at 20[degrees]C.

KM was privatised in 1996 and later Triton-Vuko of the US won a 94.5% equity in it. The acquisition was contested by the local oil lobby and the US firm was later replaced by Nations Energy of Canada.

North Buzachi, operated by ChevronTexaco, produces 15,000 b/d (from 8,000 b/d in 2003), and is scheduled to produce 20,000 b/d by end-2005 and 45,000 b/d by 2009. Texaco (now ChevronTexaco) acquired a 65% stake in this from the private Saudi firm Nimir Petroleum in September 1998. The field then was said to contain 1.5 bn barrels of oil and 35 BCF of gas in place, of which 600m barrels and 30 BCF were in 1998 said to be recoverable. The oil is heavy and highly viscous (see background in Vol. 55, Gas Market Trends No. 4).

Kazakhoil-Aktobe (KOA) has a 50-50 venture with a small Canadian firm, Nelson Resources, producing oil in north-western Kazakhstan from the Alibekmola field. A full development of this onshore field began in 2002 and the plan has called for the drilling of 60 production wells and 17 injection wells over a period of four years. The field has proven and probable reserves of about 239m barrels, with another 168m barrels classified as possible. The field went on stream in April 2003.

This venture in May 2003 became the fifth supplier of crude to CPC as under a contract signed with the pipeline firm in the previous month. The KOA-NR venture was committed to pump 6,000 b/d in the initial phase and the volume was raised to 12,000 b/d at end-2003. (The other four crude suppliers to the CPC line are TengizChevrOil, Karachaganak's KIO, EmbaMunaiGaz, and Shell's Arman field - see below).

Nelson Resources has an agreement with KMG granting it an option to acquire a 25% stake in a limited liability partnership called Zhambai. Zhambai holds interest in a few offshore exploration licences in the North Caspian Sea close to the Volga Delta.

Shell in March 2003 acquired the Kazakh assets of Kerr-McGee of the US. These include a 50% stake in the Arman field on the Buzachi Peninsula which Kerr-McGee got in the late 1990s from the acquisition of Oryx Energy. Arman, containing 44m barrels and about 17 BCF of recoverable oil and gas, produces 3,500 b/d of 25-29[degrees] oil with viscosity of 30 cp at 20[degrees]C.

KazakTurkMunay Joint Petroleum Corp (KJPC): Led by the Turkish state-owned company TPAO, which holds 49%, KJPC is a producing JV. TPAO's partners are the Kazakh geology ministry's KazZarubejGeologia (26%) and KMG (25%). KJPC was set up under a deal signed on Jan. 9, 1993. In operation since 1994, it has six onshore blocks in a Pre-Caspian Basin in Uralsk, Aktau, Atyrau and Aktyubinsk regions. The latest was acquired in 1997 by TPAO under a $750m deal for a block in Aktyubinsk region near Zhanazhol, with the area said to have 330m barrels of oil. Amoco (now part of BP) joined TPAO in the latter block in early 1998 and acquired 50%.

Shagyrly-Shomyshty field, in Block Al-1551 in the North Ustyurt Basin of the Mangyshlak area, was awarded in 1999 to American Int'l Petroleum Corp. (AIPC). The field, found during the Soviet era, has a fairly big gas reserve. Gas production at this field averages 200 MCF/day (see background in Vol. 55, Nos 3-4).

KezbiAngloMunai, a JV of Kazakhoil and the British company Wedderburn, produces a small volume of oil from the Kamenistoye field in the Aktau region. Wedderburn Securities bought the original UK partner in this venture, Anglo Caspian Oil, in late 1997.

Imperial Energy Corp. of the UK on July 21, 2004, said it acquired a 75% equity in TOO Sevkazgra, a Kazakh exploration company, for a cash payment of $100,000. Sevkazgra owns oil exploration licences covering more than 4,000 square kilometres of the relatively unexplored Kostanai province of northern Kazakhstan.

Peter Levine, Chairman of Imperial said in a press release that Sevkazgra remained very much a wildcat project and came with the commensurate level of risk. He added: "Imperial nevertheless enthusiastically approaches the exploration here on a measured, step-by-step approach".

The licenced area is not covered by any modern seismic survey but in Soviet times some 222 exploratory wells were drilled in pursuit of water for agricultural irrigation and coal. Of those wells, 47 found evidence of heavy oil and/or bitumen at shallow depths. However, as the exploration was focused on the search for water/coal, those wells demonstrating oil were plugged and abandoned.

This area of Kazakhstan remains largely unexplored and Imperial now plans to perform "focused seismic and investigative work using latest technology with a view to exploratory drilling". The geology is considered to be similar to western Siberia where Imperial is already active. The licence area has good infrastructure and transport links and is potentially well situated for export to China.

Imperial will be responsible for funding the work at Sevkazgra, which it will do by way of loans, the repayment of which will be a first call on profits from the venture. As part of the deal, Imperial is entitled to appoint a director general of Sevkazgra. Sevkazgra also holds licences for the exploration of copper and black iron ore. This part of Sevkazgra's business, being non-core to Imperial, includes the relevant assets, liabilities, losses and profits and is ring-fenced in favour of the minority shareholder and will be hived out of the company on a no gain, no loss basis in 2005, leaving the oil exploration licences to form the core of the project.

Imperial has an Advisory Council comprising expert consultants in relevant sectors and "as the Company grows so will the constituency of the Council mature and expand". To that end, Keith Dallard has been appointed as a member of the council moving from his previous position of general manager which will enable the board "to benefit from his extensive knowledge of both the oil and gas industry and his relevant regional expertise". The company has recruited and put in place an executive management team at an operational level "to take Imperial forward given its recent acquisitions".

Tyub-Karagan, an offshore block in the Kazakh sector of the Northern Caspian, is being explored for development by LUKoil under a 40-year PSA with KMG signed in early 2004. The block is said to contain reserves of 113m tons (825m barrels) of oil.

Total capital investment has been put at $2.1 bn, with operating investment to reach $1.7 bn. LUKoil and KMG are 50-50 partners in this.

Kurmangazy, on offshore block in the Northern Caspian, is being explored jointly by KMG and the state-owned Russian company Rosneft under an agreement signed by the two firms in November 2002. That finalised a governmental agreement signed in the spring of 2002 that ended a dispute between Russia and Kazakhstan over ownership of the block. Rosneft was committed to drill two exploration wells on the block in 2003.