NRG Resources is planning to spin-off NRG Resources Kazakhstan, Inc. as a stand-alone oil exploration company for the purpose of planning to develop the Kokaral Munai concession in the Kzil-Ordinskoy area of the Aral Sea. This new entity intends to pursue prospecting and production opportunities in the Aral Sea region, under a concession license granted by the Ministry of Power and Minerals of the Republic of Kazakhstan. The planned development is approximately 2,400 square kilometers, covering the Kokaral Peninsula in the north part of Aral Sea, an area considered to be desirable by geologists and international producers. The territory was originally leased by the Kazakhstan government in 1997 to Kokaral Munai LLP, with a grant of exclusive rights on exploration and production for hydrocarbons within the Kokaral area. Subsequently, Kokaral Munai LLP was acquired by Munaisystem INK.
Initial independent geological studies have been completed on the properties that indicate the significant potential of recoverable oil and gas. Geotex OJSC has performed geophysical work (150 km of 2D seismic surveys from 1989 through 1991, and in 1998). The studies identified two large structures at the depth of 1500-2500m, showing potential oil and gas at a depth of less than 1500 meters. Within the licensed area there are two formations (Eocene and Jurassic) indicating the potential for hydrocarbons accumulation. According to the due diligence material submitted in connection with the acquisition of Munaisystem INK, Kokaral's predictable resources were estimated to be 38 Million tons. "The studies are still in a relatively early phase, but indicate promise," stated NRG Chairman and Chief Executive Officer, Tony Vanetik.
The Kokaral block occupies approximately one sixth of the Aryskumsky trough with the average resource ranging from 5 to 15 million tons of conditional propellant. The Kokaral territories take advantage of an existing and rapidly expanding transportation infrastructure. The licensed territories are located less than 100 km from the Aralsk Railway Station. The Bukhara-Ural Pipeline is in the western part of the property, approximately 75 km from its center. The Chinese National Oil Company is currently constructing an oil pipeline within 150 km of the concession, linking Kazakhstan's Kenkiyak and Kumkol fields with China. These infrastructure developments can provide the opportunity for oil and gas to be efficiently transported from Kokaral with oil being transported by railway through Aralsk Station and/or by the Kenkiyak-Kumkol pipelines. Natural gas could be transported by the Bukhara-Ural Pipeline.
"With the prospect of developing such large oil and gas assets, we are poised to become a serious participant in the international oil and gas exploration business," commented Serge Lipatov, Director of NRG Resources and also the Senior Executive of the Russian Railroads, the largest corporation in the Russian Federation, which employs approximately 1.2 million people. "The U.S. Department of State estimates that Kazakhstan will be one of the top 10 oil producing nations in the world by 2015," commented Tony Vanetik, further stating that, "We hope to position ourselves to play a key role in the development and delivery of Kazakhstan's vast energy resources to the world energy markets."
Orange County, California-based NRG Resources, Inc. is a business that manufactures and markets a proprietary line of oil additives and lubricants for industrial and commercial applications. The Company also owns a wholly owned subsidiary, NRG Resources Kazakhstan, Inc., whose principal activity is the exploration of oil and gas in Kazakhstan.
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