Ernst & Young: Kazakhstan to become important destination for oil, service companies
By OGJ editors
HOUSTON, Apr. 29 -- Kazakhstan stands on the threshold of becoming an important destination for oil companies and service companies, Ernst & Young LLP tax analysts said Thursday at a UK-former Soviet Union seminar in Aberdeen.
Kashagan, one of the largest oil discoveries in the last 30 years, is projected to have ultimate production of as much as 13 billion bbl (OGJ Online, June 28, 2002). Development will be implemented in multiple phases: Initial production of 75,000 b/d of oil will begin in 2008, with later phases ramping up to 450,000 b/d of oil and subsequently reaching a plateau of 1.2 million b/d of oil.
Capital investment for Kashagan's full field development currently is estimated at $29-30 billion during 15 years, with the first phase¿currently under way¿expected to amount to $10 billion (OGJ Online, Feb. 24, 2004).
Meanwhile, it is estimated that overall oil and gas investment in Kazakhstan could be worth $150 billion by 2015, said Gerard Anderson, Ernst & Young tax partner in Kazakhstan. Much of this capital is expected to come from Russian and Western investors.
"The best oil discovery in the world in the past 30 years was made in Kazakhstan, and the industry believes that there is still more to be found; with the right investment and infrastructure, the output in production will only grow exponentially in the future," Anderson said.
Caspian Sea region players
Kazakhstan just recently began to realize the value of its reserves because international capital and expertise became available after the Soviet Union collapse, he said. The 2000 Kashagan discovery has widened the opportunities for companies, including independents, to explore and develop the Caspian Sea region.
Traditional North Sea operators and suppliers are among the companies most apt to benefit, said Derek Leith, Ernst & Young UK director of oil and gas taxation.
"We are likely to see Scotland in general, and Aberdeen in particular, becoming the bridging point for companies looking to invest in Kazakhstan," Leith said.
In addition, the UK's midway position between the US and Russia combined with its with 30 years of lessons from North Sea oil production could help companies access international capital and tap into Kazakhstan's oil, Leith and Anderson agreed.