BG, Partners Agree to Karachaganak Gas Sales Deal

BG Group and partners on Friday agreed on the terms of the Phase III Karachaganak Gas Sales Agreement (GSA) with KazRosGaz, a joint venture between Gazprom and KazMunaiGaz.

The agreement, which is subject to approvals, sets out the commercial terms governing the sale of gas over a 15 year period commencing during the fourth quarter of 2007. Volumes under the agreement will increase to 16 billion cubic meters per annum (bcma) following completion of the US$8 billion Karachaganak Phase III expansion, which is expected onstream in 2012.

Mark Carne, BG Group Executive Vice President, Europe and Central Asia said:

"This agreement is a significant milestone in the continued development of the giant Karachaganak field in Kazakhstan and represents the commercialization of over 7 trillion cubic feet of gas. It secures enhanced value for the Karachaganak partners and the Republic of Kazakhstan. Additional gas sales resulting from the expansion will also enable the venture to increase liquids production for export to high-value western markets."

The Karachaganak Phase III expansion project is due to be sanctioned in 2008 and will see gas and liquids sales increase to 16 bcma and 16.5 million tonnes per annum (mtpa), respectively. Currently 8 bcma of untreated Karachaganak gas is exported to the Orenburg processing facility in Russia. The expansion of the Orenburg facility to accommodate the increased volumes as a result of Phase III will be completed by the KazRosGaz joint venture.

BG Group plc is a global natural gas business. Active on five continents in 25 countries, it operates four business segments: Exploration and Production, LNG, Transmission and Distribution and Power.

BG Group has been active in Kazakhstan for more than a decade. It is the joint operator of the Karachaganak gas condensate field in northwest Kazakhstan in which it owns a 32.5-percent interest. Karachaganak holds estimated gross reserves of over 2.4 billion barrels condensate and 48 trillion cubic feet of gas. The company also holds a 2-percent interest in the Caspian Pipeline Consortium oil pipeline, which transports oil from western Kazakhstan to the Black Sea.