Kazakhstan to Get Half of BG's Share in Kashagan

At the meeting with members of Senate Committee for Social and Cultural Development on January 28, Vladimir Shkolnik, Minister of Energy and Mineral Resources of Kazakhstan said that members of Agip KCO agreed to sell one half of BG's share in the North Caspian project to Kazakhstan (the whole of BG's share stands at 16,67%). He said: "They agreed to sell 50% of this share. The state will buy it. I hope that we will be able to conclude this deal. This is the return of a very great asset back to the country. It is needed badly and it is very beneficial for the country."

Mr. Shkolnik didn't quote the price that will be paid for 50% of BG's share in the project. He also noted that "negotiations regarding other fields are also being held."

Mr. Shkolnik reminded that in accordance with current legislation, which was adopted on November 5, 2004, the state has pre-emptive rights to buy shares in extractive projects.

The head of the oil ministry said that the process of purchasing shares in a number of extraction projects "could only have been started after the country had the necessary money."

About the North Caspian Project:

BG had announced that it is willing to sell its 16,67% share in the Agip KCO consortium which operates a number of oil fields in Kazakhstan's sector of North Caspian shelf, the largest of which is the Kashagan field.

Together with Kazakhstan's government, other members of the consortium also intend to get in on BG's shares. Other members of the consortium are ENI (operator of the project), Total, ExxonMobil, Shell (each with a 16,67% share), Inpex and ConocoPhillips (with 8,33% each).

Agip KCO was created after corresponding Production Share Agreement was signed in 1997 for a 40-year term.

The consortium is planning to start actual production in 2007-2008.

According to Agip KCO's statements recoverable oil resources of Kashagan fields are at least 7 to 9 billion barrels. General geologic resources contained in the reservoir are estimated at 38 billion barrels.