Scandinavian Oil-Gas Magazine

KazMunaiGas EP (KMG EP) and BG Group announced the signing of an agreement to farm-in into a BG Group operated license in the United Kingdom Central North Sea – the production license (P1722) which contains the White Bear prospect. KMG EP is acquiring a 35% interest in the license.

The agreement, which was signed in Astana by KMG EP Chief Executive Officer Mr. Kenzhebek Ibrashev and BG Group Senior Vice President Central Asia and President BG Kazakhstan, Mark Rollins marks the first official venture between KMG EP and BG Group under the terms and conditions of the Upstream Co-operation agreement signed in December 2008.

The White Bear prospect, within the P1722 license, is located close to the BG Group's existing Everest and Armada producing assets. BG will retain the remaining interests and will continue to operate the license on behalf of the partners. The license carries an outstanding commitment to drill one further exploration well and the partners plan to drill this well in 2011.

The transfer of an interest meets terms and conditions of the cooperation agreement signed in 2008. KMG EP farm-in financial risks including drilling costs and other project liabilities at the HC pre-discovery stage are estimated at USD 25-30 million. KMG EP's economical evaluation of the project followed the corporate investment criteria reflecting the cost of capital and risks associated with this type of projects.

KMG EP Chief Executive Officer Mr. Kenzhebek Ibrashev said, "This agreement marks the first entry of KMG EP into international operations outwith Kazakhstan. It follows our strategic aims of developing a selected portfolio of quality exploration and production assets, not only within Kazakhstan, which we are continuing to do, but internationally. It also provides us with access to BG Group's offshore skills, techniques and experience which is important to our mid and longer-term development and to our future expansion of exploration and production activity into the offshore Caspian Sea. We will continue our efforts abroad while maintaining our focus on delivering enhanced performance from our core assets and associate interests within Kazakhstan."

BG Group Senior Vice President Central Asia and President BG Kazakhstan, Mark Rollins, said, "We at BG Group are delighted to be working with KazMunaiGas Exploration Production as a partner of choice and greatly value our cooperation in this high potential project. We are pleased to have reached this agreement and we are confident that the transfer of an interest in the White Bear prospect to KazMunaiGas Exploration Production will result in a new era of beneficial cooperation for the strategic partnership between BG Group and the Republic of Kazakhstan."

Tags: KazMunayGas