Lukoil to help develop Kazakh offshore fields

Russia's Lukoil is interested in helping to develop two fields near the giant Kashagan oil project off the shore of Kazakhstan, Kazakh president Kassym-Jomart Tokayev said at a forum on September 30.

Kazakhstan had hoped to bring on board Shell and its partners in the Kashagan project to jointly develop the smaller Kalamkas-Sea and Khazar fields situated in its proximity. But the investors pulled out, citing a poor rate of return on investment.

'We will start developing the large Kalamkas-Sea and Khazar fields," Tokayev said in the 17th Interregional Cooperation Forum. "The strategic partner from the Russian side has been identified: this is Lukoil. The total project cost will be around $5bn."

Lukoil is a seasoned Caspian Sea operator. It is exploring several new prospects off Kazakhstan, including Al-Farabi, Zghenis, Khvalynskoye and Tsentralnoye. It is also a partner at the BP-led Shah Deniz project off Azerbaijan, and is developing several oilfields on its own off Russia.

In late September Lukoil also signed an agreement to buy into a BP-led exploration project in the Azeri waters of the Caspian Sea. Lukoil will acquire a 25% stake from BP in the Shallow Water Absheron Peninsula (SWAP) area. BP will retain a further 25% and will remain the project's operator, while Azerbaijan's state-owned SOCAR will continue to have a 50% position.

"We are pleased to welcome Lukoil to the SWAP partnership, building on our successful relationship in the Shah Deniz project," BP's regional president for Azerbaijan, Georgia and Turkey, said in a statement. "We look forward to working closely with them and SOCAR on the exploration work programme, which, if successful, will deliver value to Azerbaijan and to our partnership."

BP and SOCAR signed a production-sharing agreement in 2014 for the SWAP area, and after completing a 3D seismic survey at the site in 2016, they had hoped to start drilling in 2019, but had to postpone the work after delays securing a rig. They finally began drilling in August this year, and there are plans for three wells in total.

Lukoil president Vagit Alekperov said its involvement in the project was in both Azerbaijan and Russia's national interests.