Kazakhstan decides against Shell, Eni participation in Karachaganak gas plant project
Kazakhstan will not proceed with constructing a gas processing plant at the Karachaganak field in partnership with Shell and Eni, said PSA LLP, the government body overseeing major oil and gas projects under production sharing agreements.
"The Karachaganak project operator, represented by Shell and Eni, was unable to reach a final investment decision on the gas processing plant. Accordingly, the authorized body has formally requested that the contractor complete all work on the plant by May 2026," PSA said in a statement.
Kazakhstan indicated it would no longer pursue the project under the current production sharing agreement, citing repeated cost overruns, low economic returns, and the operator's tendency to link approval of the plant to unrelated matters.
"Thus, construction of the gas processing plant by the current project operator is not viable from technical, commercial or legal perspectives," PSA added.
The agency said Kazakhstan had begun designing its own domestic gas processing plant to process Karachaganak gas and ensure national energy security.
The plant, with planned capacity of 4 billion cubic meters per year, was slated for completion in 2028. Kazakhstan's Energy Ministry earlier said that building a domestic gas processing facility at Karachaganak was the country's strategic priority.
The Karachaganak oil and gas condensate field is one of the largest in the world. Its reserves are estimated at 1.2 billion tons of oil and 1.35 trillion cubic meters of gas. It is operated by Karachaganak Petroleum Operating B.V., which is comprised of Shell that owns a 29.25% holding in KPO through its 100% affiliate company BG Karachaganak Ltd, Eni (29.25%), Chevron (18%), Lukoil (13.5%),and KazMunayGas (10%).
Karachaganak Petroleum Operating has been developing the Karachaganak field since 1997 on the basis of a 40-yr production sharing agreement.
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