EEG: Akshabulak Oil Field Development

completed

Summary Of Project Information (SPI)Project NameRepublic of Kazakstan-Akshabulak Oil Field DevelopmentRegionCentral AsiaSectorProject No007416Projected Board DateMarch 28, 1996Company NameKazgermunai (KGM)Technical Partner and/or Major Shareholders Po Yuzhkaneftegaz (YKNG)(50%), a subsidiary of the Kazak Production Association, Munai Gas; Erdol-Erdgas Gommern GmbH (EEG)(25%), the former East German exploration and production company now owned by Gaz de France; and RWE-DEA AG (25%), a diversified German energy and electrical company. RWE-DEA AG purchased Veba Oel''s stake in the project in 1995. Project Cost Including proposed IFC investment Project cost: $265 million. Proposed IFC Investment: Equity and quasi-equity in the form of shareholders’ loans of up to $62 million for up to a 12.5% participation in Kazgermunai.Location of project and Description of site The project site is located in the South Turgai Basin of central Kazakstan, approximately 150 km north of the city of Kzyl-Orda. The field was discovered in 1988 by YKNG.Description of Company and Purpose of Project (include IFC role/development impact) KGM is a joint venture limited liability company owned 50% by YKNG, and 25% each by EEG and RWE-DEA. The purpose of the project is to develop the Akshabulak oil field, which is expected to (1) reduce Kazakstan’s dependency on imported oil from Russia by providing a stable domestic supply, and (2) generate valuable foreign exchange earnings for the country. Furthermore, in its initial stage, the project will provide new direct employment for about 75 Kazak citizens, who are expected to benefit from the know-how acquired through close cooperation with the Western industrial partners. The success of this project will also have an important demonstration effect for further cooperatitve developments in the sector. By taking a stake in the equity of KGM, IFC’s primary role would be to serve as a neutral, “honest broker” between the joint venture partners. Environmental Category and Issues This is a category A project according to IFC''s environmental review procedure. Environmental issues associated with this project include site contamination as a result of previous activities, the management of produced gas and water, impacts on groundwater resources, erosion and dust, as well as oil spills. A detailed environmental assessment has been prepared for the project which indicates that site contamination as a result of previous activities is limited and localized and the aforementioned associated impacts can be mitigated to acceptable levels by employing standard industry practices. The environmental assessment process included consultations with local populations and government authorities. The environmental assessment has been available in Kazakhstan since May 1994.The are from the Public Information Center.Host country location of environmental documentsCity library in Kzyl-Orda and Ministry of Ecology, Almaty.Date SPI sent to PIC February 28, 1996For Additional Information contact: Corporate Relations Unit Telephone: (202) 473-3800Fax: (202) 676-0365Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).