(Oil Price) – Shell and Kazakhstan have signed an agreement for oil and gas exploration in the Zhanaturmys block in western Kazakhstan, the Kazakh Energy Ministry said on Thursday.
The agreement – signed by Kazakhstan’s Deputy Energy Minister Yerlan Akbarov and Suzanne Coogan, Senior Vice President and Country Chair at Shell Kazakhstan – entails seismic exploration, data collection, and technical assessment of potential oil and gas resources in the Zhanaturmys block.
The contract will run until 2032, considering the scale and technical complexity of the exploration project in the block that spans 1,377 square kilometers, or 532 square miles, the Kazakh Energy Ministry said.
The Zhanaturmys block is located in one of Kazakhstan’s most promising oil and gas basins and could hold significant potential for expansion of hydrocarbon exploration in the country, the ministry added.
Shell’s Coogan commented that the agreement reaffirms Shell’s commitment to long-term cooperation with Kazakhstan, the energy ministry said.
Shell and other international majors are currently locked in lawsuits and international arbitration with Kazakhstan over two major producing projects in the country.
The international oil companies operating the giant Kashagan oilfield in Kazakhstan last month initiated an arbitration process to challenge a massive $5-billion fine for allegedly exceeding sulfur storage limits at a processing facility at the second biggest oilfield in the OPEC+ producer.
The Kashagan oilfield is being developed by the North Caspian Project consortium of international majors, including Shell, and Kazakhstan’s state oil firm KazMunayGas.
Kazakhstan has several arbitration cases with as much as $166 billion in claims against the majors for damages, mostly because of lost revenues from delays at the Kashagan oilfield.
“We think that there’s still a lot of potential investment opportunities in Kazakhstan, but we will hold until we have better line of sight to where things end up,” Shell’s chief executive officer Wael Sawan told analysts during the Q4 earnings call last month, referring to the lawsuits.
By Charles Kennedy for Oilprice.com
