KazMunayGas, Lukoil suspend joint project to develop Kalamkas-Sea, Khazar fields due to sanctions

MOSCOW. March 26 (Interfax) - KazMunayGas (KMG) and Lukoil have suspended work on a joint project to develop the Kalamkas-Sea and Khazar fields in the Kazakh section of the Caspian Sea has been suspended, KMG CEO Ashat Khassenov said during a video conference with analysts.

"Last year, we completed the design stage of the joint Kalamkas-Sea and Khazar project, but, due to the sanctions which have been imposed, further work on the project has been suspended," he said.

Lukoil has an equal stake alongside KMG in the project to develop the Kalamkas-Sea and Khazar fields in Kazakhstan's sector of the Caspian Sea, which is expected to produce its first oil in 2029. The pay horizons lie 1,500-2,000 meters below the seabed. Total recoverable reserves are estimated at 48.5 million tonnes of oil and 19 billion cubic meters of gas. Production is expected to total about 4 million tonnes per year (80,000 barrels per day), with a production plateau of at least five years. Investment in the project will total about $6.4 billion, according to tentative estimates. The companies planned to make the final investment decision on the Kalamkas-Sea, Khazar and Auezov project in 2025.

Lukoil has been working in Kazakhstan since 1995 and has stakes in major oil and gas projects in the Central Asian country, such as Karachaganak (13.5% stake in field operator Karachaganak Petroleum Operating B.V.), Tengiz (5% in operator TengizChevroil) and Kumkol (50% of Turgai Petroleum), and together with Kazakhstan is involved in the CPC, in which it holds a 12.5% stake.

The U.S. Treasury Department included Lukoil in its sanctions list on October 15 and issued a license to wind down business with the company. However, international projects in Kazakhstan involving Lukoil were immediately exempted from sanctions until October 14, 2027, specifically the Caspian Pipeline Consortium (CPC), TengizChevroil and Karachaganak.