BG, Eni-led Kazakh Venture May Cut Expansion Cost to $10 Billion

Oct 05. Bloomberg

By Nariman Gizitdinov and Anna Shiryaevskaya

BG, Eni-led Kazakh Venture May Cut Expansion Cost to $10 BillionThe BG Plc and Eni SpA-led Karachaganak oil venture in Kazakhstan may bring the costs of project expansion to as low as $10 billion, said one of the partners.

The venture is considering various investment options for the third phase of development, Andrey Kirillov, head of OAO Lukoil’s Kazakh unit, told reporters in Astana today, without elaborating. Lukoil, Russia’s second-biggest oil producer, holds a 15 percent stake in the project.

Kazakhstan expects the Karachaganak venture, the second- biggest oil-producing venture in the Central Asian country, to decide on a third phase of development that will cost $14.5 billion and boost output to 16.5 million metric tons a year, state-run KazMunaiGaz National Co. said in February. In 2007, BG estimated the expansion would cost $8 billion by 2012. The partners last year postponed the decision until this year.

The venture has been in talks with the government on ceding a minority stake in Karachaganak. Kirillov declined to comment on the talks today. BG and Eni are the largest shareholders in the Karachaganak venture, each holding a 32.5 percent, while Chevron Corp. has a 20 percent stake.