ConocoPhillips, in association with its co-venturers in the North Caspian Sea Production Sharing Consortium, and Kazmunaygaz (KMG), the petroleum authority of the Republic of Kazakhstan, announce approval of the development plan for the Kashagan oil field.

“We are excited about the potential of this world-class project and are pleased with the path forward outlined in the development plan,” said Bill Berry, ConocoPhillips executive vice president of Exploration & Production. “Last year, we exercised our pre-emptive rights on British Gas’ pending interest disposition, bringing our ownership interest in the project to 10.19 percent once the pre-emptions are approved. This fits our strategy of improving our upstream portfolio through several avenues, including gaining access to giant discovered reserves that are not yet developed.”

With production estimates of up to 13 billion barrels of oil, the Kashagan field is one of the largest discoveries in the last 30 years. Initial production from the field is currently targeted at 75,000 barrels of oil per day in 2008. Subsequent phases will bring production to a level currently estimated at 1.2 million barrels of oil per day. To enhance oil recovery and to reduce sulphur handling, the plan includes injection of raw gas back into the reservoir. This will be accomplished by construction of facilities for onshore gas processing and offshore raw gas injection. The capital investment for full field development is currently estimated at approximately $29 billion, with the first phase expected to amount to about $10 billion.

The sanctioned project involves significant technical and technological challenges, including some associated with the harsh climatic conditions. Instrumental in gaining approval of the development plan was a careful and thorough analysis of how best to preserve the delicate ecological environment.

The Kashagan project will positively impact the Kazakh national economy in terms of major opportunities and benefits through export revenues and the employment of Kazakhstan firms and manpower. Additionally, investment in the training of Kazakh employees and executives for the project should support the growth of the Kazakh petroleum industry.

The field will be operated by Agip KCO on behalf of the companies forming the North Caspian Sea Production Sharing Consortium (interests before pre-emption): Agip Caspian Sea B.V., 16.67 percent; British Gas, 16.67 percent; ExxonMobil, 16.67 percent; Shell, 16.67 percent; Total, 16.67 percent; ConocoPhillips, 8.33 percent; and Inpex, 8.33 percent.

ConocoPhillips is an integrated petroleum company with interests around the world. Headquartered in Houston, the company had approximately 39,000 employees, $82.5 billion of assets, and $105 billion of revenues as at 31 December 2003. For more information, visit www.conocophillips.com.