01.08.2003
PRESIDENT OF KAZAKHSTAN STARTS FIRST OIL FOR EXPORT FROM NEW PRODUCTION FACILITIES IN KARACHAGANAK, 01.08.2003

AKSAI, Western Kazakhstan Oblast, 1 August 2003 - The President of the Republic of Kazakhstan Nursultan Nazarbayev today commemorated the flow of the first oil for export to world markets produced from the new production facilities in the Karachaganak Field.

The opening ceremony was held at the Karachaganak Processing Complex, the biggest of the new facilities built by the international consortium Karachaganak Petroleum Operating bv (KPO).

Kazakhstan government officials, leadership of national company KazMunaiGaz, WKO Akim Krymbek Kusherbayev and senior representatives from KPO’s four parent companies - BG Group, Eni, ChevronTexaco and LUKOIL - attended the event, which also marked the commencement of the injection of gas into the reservoir from the new Unit 2 facility.

During his opening address, the President of the Republic of Kazakhstan Nursultan Nazarbayev said: "From now on the Karachaganak products will have access to the world market. I congratulate investors, contractors and everybody who worked at this outstanding complex with great success that will serve for the benefit of the people."

KPO General Director John Morrow said: "When in November 1997, KPO partners signed the 40-year Final Production Sharing Agreement with the Government of Kazakhstan, a commitment was given to construct new facilities that would allow the Karachaganak oil to enter the world markets. We have delivered on that promise."

"This success is the result of the magnificent efforts of the KPO team and its contractors and the close and effective co-operation between KPO, the Republic of Kazakhstan and its national oil and gas company, KazMunaiGas."

As well as the construction of the new facilities for gas and liquids processing and gas injection, Phase Two of the project included enhancement of existing facilities inherited from the Soviet era, the work-over of more than 100 wells and the construction of a 120 MW power station. Also constructed was the 635-kilometre export pipeline to Atyrau, which connects to the Caspian Pipeline Consortium (CPC) system that will carry the Karachaganak oil on to export facilities on the Black Sea coast at Novorissiysk.

At the peak of the construction programme the project created some 20,000 jobs, 80% of which were filled by Kazakh nationals, and over 500 Kazakh companies won contracts to supply goods and services.

Throughout the construction phase, KPO has demonstrated world-class environmental practices and met its long-term commitment to social improvement, which will see the company invest $10 million annually in local schemes throughout the 40-year life of the project.

All gas and condensate production from Karachaganak was sent for processing at the Orenburg facility in Russia prior to the completion of the new facilities. In 2002, the existing facilities produced a record of 5.2 million tonnes of condensate and 4.7 billion cubic metres of gas.

Now, with the new facilities operational and access to the world markets available, the output from the field is planned to increase to more than 10 million tonnes of liquids per year and annual sales of gas are expected to rise to some 7 billion cubic metres. Around two thirds of the liquids is expected to be exported via the export pipeline and the CPC system.