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KazMunayGas mulling over increasing its participation in TCO through purchasing BP's stake in LUKARCO
Astana , December 18 2008
KazMunayGas (KMG, a Kazakh national oil and gas company) is considering possibility of raising its stake in JV Tengizchevroil (TCO, develops Tengiz and Korolyov oil and gas fields in Atyrau region, western Kazakhstan) by purchasing some of BP's interest in LUKARCO, said Kairgeldy Kabyldin, the president of KMG.
"We have an offer from BP (to purchase its stake in JV - Interfax-Kazakhstan) but the LUKARCO deal is very complicated," he told a Thursday press conference in Astana.
"They (LUKARCO - Interfax-Kazakhstan) have two assets: TCO as oil producing asset and CPC which is a pipeline (...) Of course, we are interested in the oil producing asset and that's why we have suggested that LUKOil divide the assets and set price for each of them," Kabyldin stressed.
When answering a question how long the negotiations about the issue would take he said that "LUKOIL and BP have an option to hold talks till April next year."
TCO started oil production activities in Tengiz back in 1994 based on the agreement signed between Chevron and Kazakhstan in 1993 on an equal-share basis.
The joint venture is currently owned by American ChevronTexaco Overseas (50%), ExxonMobil Kazakhstan Ventures Inc. (25%), Kazakhstan through the national company KazMunayGas (20%) and Russian-American JV LUKArco (5%).
Until recently TCO produced about 300,000 barrels of oil a day, or over 20% of all oil produced in Kazakhstan.
This year the company has announced its plans to raise its output to 18.7 million tons a year, or up 34.5%, and later TCO intends to further increase its production to 24 million tons a year.
In 2007 the company produced 13.9 million tons of oil.
As reported, the shareholder of Caspian Pipeline Consortium (CPC) approved BP's withdrawal from CPC.
BP owns a 6.6% stake in CPC through two joint ventures - LUKARCO B.V. (a joint venture with LUKOIL) and Kazakhstan Pipeline Ventures (a joint venture with KazMunayGas).
The CPC shareholder signed an agreement on BP's withdrawal from LUKARCO and Kazakhstan Pipeline Ventures. KazMunayGas will pay $250 million for BP's interest in Kazakhstan Pipeline Ventures. LUKOIL is mulling over buying BP's stake in LUKARCO.
LUKOIL and KazMunayGas have pre-emption rights to purchase BP's interest in these joint ventures.