) has finally decided to give up the Kazakh Caspian oilfield
project, following unsuccessful negotiations to initiate
exploration operations there.
In April 2011, the Norwegian energy major and Kazakh national oil
and gas company KazMunaiGas (KMG) signed heads of agreement for
the Abay block in the Kazakh sector of the Caspian Sea.
Located 65 kilometers from the shore, the Abay block holds an
estimated reserve of 387 million tons (2.8 billion barrels).
Kazakhstan's main source of revenue is hydrocarbon production.
However, delays and cost effectiveness have hindered the
country's endeavors to intensify its offshore production.
Late last year,
) planned to sell off its interest in Kazakhstan's giant
oilfield, Kashagan, to India's major energy explorer, ONGC Videsh
Limited. ONGC Videsh is the international arm of India's Oil and
Natural Gas Corporation Ltd.
The to-be sold properties include ConocoPhillips' 8.4% interest
in the giant Kashagan field in Kazakhstan that will fetch $5
billion. Kashagan has estimated reserves of 30 billion barrels of
oil, of which 8 billion to 12 billion are potentially
recoverable. However, the project ran into delays since its
discovery. Besides these hurdles, rising costs have been an
Kazakhstan holds the second position among the oil producing
countries in the former Soviet Union. However, the country needs
) Tengiz and the
) and BG Group plc-operated Karachaganak production to maintain
its production level above 80 million metric tons of oil a year
Although Statoil's attempt in the Kazakh Caspian oilfield project
failed, it delivered strong exploration results in 2012, adding
significantly to its resource base by making several high impact
discoveries, since the last 2 years.
Following a surge in global oil demand, we see the Norwegian oil
major as likely to benefit from its cooperation alliance with
Russia-based Rosneft - the world's largest hydrocarbon-producing
Statoil holds a Zacks Rank #3 (short-term Hold rating).
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