KMG, Lukoil working on solution to financing Kalamkas-Sea, Khazar projects

ASTANA. April 2 (Interfax) - KazMunayGas (KMG) and Russia's Lukoil are now trying to solve the issue of financing the further implementation of the Kalamkas-Sea and Khazar projects in Kazakhstan's sector of the Caspian Sea, the head of the Kazakh state oil company, Askhat Khassenov said.

"Today we have a constraining factor given sanctions and this is raising financing. We completed the design part to international standards. Now we need to solve the issue of raising financing. There are certain difficulties, but we're looking for possible options for a solution with our partner, with Lukoil," Khassenov told reporters on the sidelines of a geology forum in Astana when asked about the future of the Kalamkas-Sea and Khazar projects.

"Today, taking into account sanctions restrictions, the further issue of attracting financing is becoming acute on the part of our partners. Therefore, we are now looking for all options to resolve this issue. Currently, based on the results of project financing, we need to find sources through the project financing mechanism. We will now talk with banks and look for options. For now, we are looking for mutually acceptable solutions," he said.

The company fully complies with all sanctions restrictions, Khassenov said.

"Therefore, we will have to work through the entire issue strictly within the legal framework," he said.

Last week, Khassenov said that, in view of the imposed sanctions, further implementation of the Kalamkas-Sea and Khazar joint projects with Lukoil had been suspended.

The fields are located in the Kazakh sector of the Caspian Sea. The depth of the productive horizons is 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. The expected production level is approximately 4 million tonnes per year (80,000 barrels per day), with a production plateau of at least five years. The first oil is expected at the end of 2029. According to preliminary estimates, investment was supposed to be around $6.4 billion. The participants in the Kalamkas-Sea - Khazar - Auezov field development project are KazMunayGas (50%) and Lukoil (50%). It was planned that a final investment decision on the project would be made in 2025.

Lukoil has been operating in Kazakhstan since 1995 and has stakes in major oil and gas production projects such as Karachaganak (13.5% in the operator company Karachaganak Petroleum Operating B.V.), Tengiz (5% in the operator Tengizchevroil LLP) and Kumkol (50% in JSC Turgai Petroleum), and also participates together with Kazakhstan in the Caspian Pipeline Consortium (CPC, Lukoil's share is 12.5%).

The U.S. Treasury Department added Lukoil to the sanctions list on October 15, issuing a license for winding down operations. At the same time, a number of international projects in Kazakhstan involving Lukoil were immediately exempted from sanctions until October 14, 2027, in particular the CPC, Tengizchevroil and Karachaganak projects.