Public Hearings Held Regarding Drilling on Tyub-Karagan

Today in the town of Aktau, the administrative center of Mangistau Region (West Kazakhstan), the public hearings took place regarding the environmental impact assessment of the construction of an exploration well at the Tyub-Karagan offshore area.

The hearings included the main report and speeches of representatives of the Akimat (government) for Mangistau Region, experts of the developer of the detailed drilling design, the NIPI-KaspiyMunaiGas Institute, as well as the report of TOO Nedra, the main contractor for environmental studies. Based on the results of the hearings a resolution was adopted and a protocol was signed.

It is planned to start exploration drilling at the Tub-Karagan area in spring of 2005. The work will be carried out for four months at the sea depth of 7 meters. The target well depth is 2500 meters. The main purpose of the first well construction is to search for and assess oil and gas reserves in Jurassic, Cretaceous and Triassic deposits of the Tub-Karagan structure.

In the course of the well construction and testing, the most advanced world-class technologies will be applied, which will ensure zero discharge and eliminate a possibility of pollution of the Caspian Sea. The contractor is LUKOIL Shelf Ltd., a well-known Russian drilling company, which owns a world-class self-elevating floating drilling rig Astra. The contractor was selected as a result of the tender and consultations with government authorities of Kazakhstan.

LUKOIL-Shelf tested the zero-discharge technologies at previously drilled wells in the Russian and Turkmenian areas of the Caspian Sea. Baseline environmental studies were performed at the preliminary stage of the work. The process of well construction will be accompanied by environmental monitoring at all stages. The Tub-Karagan area is located in the central part of the Kazakhstan Caspian sector. Exploration at Tub-Karagan is carried out on a parity basis by LUKOIL Overseas and KazMunaiGas, the National oil and gas company, represented by KazMunaiTeniz, which specializes in offshore projects. The operating company is Tub-Karagan Operating with its office in Aktau.

Forecast resources of Tub-Karagan amount to 388 million tons of fuel equivalent, including 324.3 million tons of oil. The probability of hydrocarbons discovery is evaluated as high. Production start year is 2010-2012. The framework document is PSA with 40-year term.