Each company will be an equal partner in the joint venture and their rights and responsibilities will be allocation accordingly. A Lukoil subsidiary will be named as the operator of the project and KazMunaiGaz representatives will be invited to work with the operator. The companies said that preference will be given to Russian and Kazakh companies when purchasing materials, goods and services for development of the field.
The signed of this agreement will also form a basis for talks on an agreement for further joint activities between the two companies. In addition, the sides agreed to take steps to include the Khvalinskoye field in the list of fields that may be developed under a production sharing agreement.
On the Kazakh side the agreement was signed by KazMunaiGaz Vice President Timur Kulibayev and on the Russian side - Lukoil First Vice President Ravil Maganov.
The document was signed in accordance with a protocol to an agreement between Russia and Kazakhstan on the demarcation of the seabed of the northern part of the Caspian, to establish sovereign rights to carry out sub-surface operations, from May 13, 2002.
This protocol establishes equal participation by Russia and Kazakhstan in exploiting the hydrocarbon resources at the Kurmangazy geological structures (in Kazakh jurisdiction) and also the Central and Khvalinskoye fields (belonging to Russia).
KazMunaiGaz and Lukoil signed a joint memorandum of mutual understanding in the area of cooperation to explore and produce hydrocarbons in the Kazakh and Russian sectors of the Caspian Sea, and also an agreement on maintaining confidentiality about their cooperation.
The Khvalinskoye field is currently the only structure in the Northern Caspian whose reserves have been audited to international standards by Miller & Lents. C1+C2 reserves at the field amount to 127 billion cubic meters of gas and 9.6 million tons of condensate. C3 reserves amount to 207 million tons of fuel equivalent.
Total Lukoil investment in the development of the Russian part of the Caspian amounts to $300 million, of total investment in the Caspian region of $800 million.
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