June 16, 2017 / 12:52 PM / a year ago

UPDATE 1-Kazakhstan says Karachaganak expansion cost halved

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ASTANA, June 16 (Reuters) - The estimated cost of a project to boost output at the Karachaganak gas condensate field in Kazakhstan has been halved from last year’s $9 billion, a senior Kazakh energy official said on Friday.

The cost may be reduced even further, said Murat Zhurebekov, chief executive of PSA LLC, a unit of state energy firm KazMunayGaz tasked with representing the Central Asian nation in some of its largest joint ventures with global majors.

Zhurebekov did not say how the costs estimate had been revised, but said the review reflected lower crude prices.

Kazakhstan is seeking $1.6 billion from the consortium of foreign investors operating Karachaganak, according to a 2016 report by Lukoil. The Astana government has said the dispute was about calculations of the parties’ shares in the field’s output.

But Energy Minister Kanat Bozumbayev, who spoke to reporters separately on Friday, said the dispute, which Kazakhstan has taken to international arbitration, would have no effect on the project which aims to ensure that the field maintains its peak output for a longer period.

“I have met a delegation of the Karachaganak consortium today,” he said. “They do not link these two issues.”

Eni and Royal Dutch Shell each own 29.25 percent of the Karachaganak project in northwest Kazakhstan, which they jointly operate. Kazakh state-owned KazMunayGaz owns 10 percent, Chevron Corp 18 percent and Lukoil 13.5 percent.

One of the world’s largest oil and gas deposits, Karachaganak contains 1.2 billion tonnes of oil and gas condensate and more than 1.35 trillion cubic metres of gas. It produced 139.7 million barrels of oil equivalent in 2016, down 1.4 percent from a year earlier. (Reporting by Raushan Nurshayeva and Mariya Gordeyeva; Writing by Olzhas Auyezov,; Editing by Dmitry Solovyov and David Evans)

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