current affair

India to get 25% in Kazakh oilfield

Coming for a price of $400 million (approximately R1,800 crore), the stake will be purchased by ONGC Videsh Ltd (OVL). A contract for the same will be signed during Prime Minister Manmohan Singh’s three-day visit to Astana starting April 15. Singh will attend the bilateral summit meeting between India and Kazakhstan.

With the focus on energy and trade, India and Kazakhstan are expected to sign at least six agreements, including the one on their civil nuclear cooperation besides OVL’s participation in the Satpayev oil block. The two sides will also ink an inter-governmental framework pact on non-military atomic cooperation.

Confirming the move, senior ONGC officials said Kazakhstan plans to transfer a 25% stake in the Satpayev area to OVL and the balance 75% will be held by Kazakh’s national oil firm KazMunaiGas, which is also the operator of the field.

The stake was originally awarded to ONGC Mittal Energy Ltd, a venture between India’s largest energy explorer Oil and Natural Gas Corp and ArcelorMittal chief Lakshmi Mittal. However, following Mittal’s exit from the venture in 2009, ONGC decided to take control of the entire 25% stake.

The Satpayev oil field is situated in the highly prospective region of north Caspian Sea and in proximity to at least four fields. A peak output of 287,000 barrels per day (14.3 million tonnes a year) is envisaged from the 256 million tonnes of reserves in the field.

OVL will pay $26 million as signing amount to the Kazakhstan government, officials said. It will also pay $80 million as a one-time assignment fee. Besides, OVL has committed a minimum exploration investment of $165 million and an additional optional expenditure of $235 million.

The 1,582-sq km Satpayev block holds 1.8 billion barrel of inplace oil reserves. It lies in proximity to major fields such as Karazhanbas, Kalamkas, Kashagan and Donga, where significant amounts of oil has been discovered.

Kazakhstan had initially planned to give 50% stake to OVL in the Satpayev and Makhambet blocks in the Caspian Sea. Later, it reduced the offer to 25%.