Lukoil Overseas

completed

KIO, as a group of foreign investors, is in charge of the field''s development, while BG and Agip have been designated as operators. Lukoil''s minority stake is held through a subsidiary organized as a Special Purpose Vehicle (SPV) with no other assets, but the 15% stake in the field. The project is expected to double crude oil and condensate production from the current 100,000 barrels/day (bbl/d) to more than 220,000 bbl/d, and to increase gas production to 1.3 billion cubic feet per day (BCF/d). The project has a significant developmental impact on the local and national economy of Kazakhstan. In addition to generating significant economic benefits to the country, it has, and will continue to contribute, to Kazakhstan''s goal of developing its under-exploited natural resources. Given the considerable money and technical skills needed to develop Kazakhstan’s vast oil and gas reserves, foreign investment is needed to fill the gap. Secondly, the project has already generated local contracting opportunities and created several thousand new construction jobs in a remote area of Kazakhstan. KIO gives preference to materials, equipment, products and services from Kazakh contractors/suppliers when such sources are competitive and it is trying to maximize the local content in the work force. KIO is providing local employees with training in western management, health and safety practices as well as on the use of western technology employed in the field. In addition, KIO spends US$10 million annually for community development. Since 1998, KIO has implemented a number of locally vital projects, such as the reconstruction and refurbishments of several hospitals in the area, installation of the new gas distribution system, road repairs, water distribution system repairs, built a new school for 800 students and repairs of the local theater.