Kazakhstan Purchases 50% of BG's Stake in Kashagan

According to the Government of Kazakhstan, yesterday the National Oil and Gas Company, KazMunaiGaz, and Agip KCO inked the agreement on the KazMunaiGaz purchase of 50% of BG's share in the North Caspian Project. The agreement was signed by the President of KazMunaiGaz, Uzakbai Karabalin. The Ministry of Energy announced in a written statement on Tuesday that "The funds for this deal will most likely be covered loans."

The entire BG stake (16.67%) was purchased by the Agip KCO consortium for US$ 1.8 billion (before taxes). The consortium had agreed on the sale of half of this stake to Kazakhstan through the state-owned KazMunaiGaz. 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 have now acquired 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.