KazMunayGaz and Lukoil have signed a Joint Operations Agreement and a Finance Agreement with regard to the Zhenis offshore project. The agreements were signed in Moscow on 30 November 2018. They set out the terms and conditions for both companies to implement the project.  Signing these documents opens the way for the participants to negotiatiate a final exploration and production contract with the Ministry of Energy of Kazakhstan.  KazMunayGaz and Lukoil signed an agreement on principles on the Zhenis offshore project in June this year. Zhenis is situated at the southern margin of the Kazakh Caspian sector, on the border with Turkmenistan. Currently there are no discoveries in this block.  Background Information  In April 2018, Energy Minister Mr. Bozumbayev announced that KazMunayGaz (KMG) and Lukoil were negotiating two offshore Caspian E&P blocks, Zhenis and I-R-2.   Earlier this year Lukoilâs President Mr. Alekperov said the company was looking at offshore blocks in Kazakhstan in light of the new subsurface and tax legislation which makes investment in the countryâs E&P projects more attractive.  Both blocks are located in the Mangyshlak-Central Caspian Basin. I-R-2 lies west of the Tsentralnoye discovery that is shared by Russia and Kazakhstan. The Russian part in the Tsentralnoye development is represented by Lukoil and Gazprom. The fieldâs 3P recoverable reserves are estimated at 664 MMbbl of oil, 1.7 Tcf of gas (mainly gas-cap) and 20 MMbbl of condensate. There are no discoveries in I-R-2.  Kazakhstan does not hold offshore bidding rounds, and several blocks off Kazakhstan are available for direct negotiations with the government/national oil company KMG. Kazakhstan legislation stipulates that KMG must have at least 50% interest in offshore projects.  Lukoil has been negotiating new projects in Kazakhstan for the last several years, however, none have been finalised due to unattractive economics. Lukoil has been involved in Kazakhstanâs E&P for a long period of time, both on- and offshore. However, its previous exploration projects in the countryâs Caspian sector have been unsuccessful. The company has drilled dry wells in the Tyub-Karagan and Atash blocks, and has had to relinquish the Zhambay block due to unavailability of a drilling rig capable of operating in the blockâs super-shallow waters at that time. All these blocks were in the Northern Caspian. The company has made several important oil and gas/condensate discoveries in the Russian sector of the Caspian.
KazMunayGaz, Lukoil sign agreement on Zhenis offshore block