Oil and Natural Gas Corporation (ONGC) is hoping to sign a contract for Kazakhstna's Satpayev oil field next week but last minute glitches may delay the agreement that has been under discussion for almost two years now.
ONGC Videsh (OVL), the overseas arm of the state-run firm, wants to ink the Exploration and Production Contract (EPC) for the Caspian Sea block when Indo-Kazakh Joint Working Group meets here on December 6, a top official said today.
"Negotiations (on the EPC) have concluded but we cannot say with 100 per cent certainty that the contract will be signed. Some glitches remain," he said refusing to go into details.
Kazakhstan Oil and Gas Minister Sauat Mynbayev is leading the Caspian nation at the inter-governmental talks on cooperation in hydrocarbon sector. The Indian side will be led by Petroleum Minister Murli Deora at the day long talks.
OVL is to invest about $400 million in the prospective Satpayev oilfield in the Caspian Sea.
Satpayev is situated in highly prospective region of North Caspian Sea and in proximity to at least four fields. A peak output of 287,000 barrels per day (14.3 million tonnes a year) is envisaged from the 256 million tonnes of reserves in the field.
Kazakh national oil firm KazMunaiGas will be the operator of the field, holding remaining 75 per cent stake.
The official said initial agreement for OVL and its partner Mittal Investment Sarl (holding firm of steel magnate Lakhsmi Mittal) getting 25 per cent stake in the Satpayev was signed during Kazakhstan President Nursultan Nazarbayev's state visit in January 2009 and a PSC has been under discussion since then.
But in November 2009, Mittal pulled out of the project and OVL decided to take the entire 25 per cent stake on its own.
He said OVL will pay $26 million as signing amount to the Kazakhstan government. Besides, it will also pay $80 million as one-time assignment fee. On top of this, OVL has committed a minimum exploration investment of $165 million and an additional optional expenditure of $235 million.
The 1,582 sq km Satpayev block, situated in the Pre-Caspian Basin of Kazakhstan, holds 1.75 billion barrel of inplace oil reserves. It lies in proximity to major fields like Karazhanbas, Kalamkas, Kashagan and Donga, where significant amounts of oil has been discovered.
The Satpayev field was originally identified for OVL but in 2007 Mittal used his influence with Kazakh government to change the allocation to ONGC-Mittal Energy - the equal joint venture of OVL and Mittal Investment.
But just when the PSC deliberations were being concluded, Mittal pulled out of the project.
