Monday, 4 April 2011

Statoil signs Abai exploration deal

Norway's Statoil has signed a heads of agreement with Kazmunaigas (KMG) to explore for oil and gas at the Abai block in the north Caspian. Under the terms of the deal, the two companies will evaluate the potential of the acreage, which lies in water depths of 8–10 metres, and set up an operating company to oversee the project.

During the exploration phase, Statoil and KMG will conduct seismic surveys and data acquisition and drill one exploration well. On top of this, Statoil will help train local personnel and provide “financial and technical assistance” to KMG's plan to build, own and operate a jack-up drilling rig in the Caspian.

This is Statoil's second stab at Abai: in 2005, the company signed a memorandum of understanding with KMG to develop Abai and the adjacent Isatai block, with the eventual aim of concluding a production-sharing agreement.

But the agreement did not lead anywhere, much to Statoil's frustration. Since then, the Kazakhs have imposed a moratorium on the signing of new offshore PSAs, which is unlikely to be lifted any time soon. Statoil has not been active in Kazakhstan since selling its stake in the Kashagan project more than 10 years ago — in hindsight, a very shrewd move given the mounting problems at Kashagan.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2011 Menas Associates

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