Development of Kurmangazy oil field to start in summer 2004

The development of the Kurmangazy oil field on the Caspian shelf may start in summer 2004 already.

"We hope to launch this project in summer not to waste time. We have all reasons for this," Russian Industry and Energy Minister Viktor Khristenko told journalists in Astana on Saturday.

According to him, "the work on this oil field began in compliance with interstate documents signed by the Russian and Kazakh presidents and subsequent intergovernmental agreements." "We are holding intensive consultations and negotiations with Kazakh colleagues to achieve profitability of this project," the Russian minister said. "Both Rosneft and Kazakh partners are interested in it," he stressed.

"Therefore, we are carrying out active work in this sphere," Mr. Khristenko said adding that the legal scheme of this project would be drafted soon.

Rosneft is negotiating with Kazakhstan for the development of the Kurmangazy major oil field on the Caspian shelf. Each side has 50% in this project worth $10 billion. However, the sides still failed to coordinate the conditions of the product sharing agreement (PSA).

According to Kazakh Prime Minister Danial Akhmetov, at issue is the increase of Kazakhstan's share in product sharing.

"We are carrying out serious negotiations with Rosneft and hope to accomplish the main aspects of the product sharing agreement in the first half of 2004. We are defending our positions and striving for a reasonable compromise. Our task is to increase Kazakhstan's share in net revenues from 25% to 60%," Mr. Akhmetov said.

After the conclusion of the product sharing agreement, Kazakhstan intends to transfer 25%, a half of its share in the project, to Total (France). Kurmangazy prospected oil reserves are estimated at 0.7-1 billion tons.