Lukoil, KazMunayGas Form JV to Develop Caspian Sea Al-Farabi Block
Moscow-based Lukoil PJSC and Kazakhstan’s state-owned oil company JSC KazMunayGas National Company (KMG) have entered into an agreement to establish a joint venture for the exploration and production of hydrocarbons reserves at the Al-Farabi block (formerly known as the I-P-2 block) located in the Caspian Sea.
In June 2019, Lukoil had entered into a Heads of Agreement (HoA) with KMG for the joint development of the block. The companies are strategic partners in a number of large-scale projects, including the Karachaganak, Tengiz, and Kumkol fields, and the Caspian pipeline consortium.
The agreement defines rights and obligations of Lukoil and KMG as future license holders under the project, and the parties intend to proceed with signing a contract on exploration and production of hydrocarbons. Under the terms of the agreement, the parties will establish a joint venture (JV), with KMG holding a 50.01% stake, and Lukoil holding the remaining 49.99%.
The Al-Farabi block covers an area of approximately 6,000 sq. km in the Caspian Sea, located 100 – 130 km off the coast in the Kazakh Sector, with water depths ranging from 150 – 500 meters. The block is situated close to fields with proven hydrocarbon reserves and includes data from a number of 2D seismic surveys conducted over the years.
MCX-listed Lukoil is engaged in the extraction, production, transportation and sale of petroleum, natural gas, and petroleum products, both in Russia and across Asia, Europe, Africa and the Americas. In addition, Lukoil also operates in the refining, marketing of crude oil and refined products, and power generation segments internationally.