BG Group, the other contracting companies and the Republic of Kazakhstan have completed their agreement on the giant Karachaganak gas-condensate field. The agreement was initially signed in December 2011.
Under the terms of the agreement Kazakhstan has acquired a 10% interest in the Karachaganak Final Production Sharing Agreement (FPSA) for $2bn cash and $1bn non-cash consideration (pre-tax) including the final and irrevocable settlement of all cost recovery claims. Tax of $1bn is payable on the gain arising on the disposal. Kazakhstan's interest will be managed by the national oil company, KazMunaiGas (KMG).
The agreement also includes the allocation of an additional 2 Mt/year capacity in the Caspian Pipeline Consortium export pipeline (CPC) over the remaining life of the FPSA. This additional capacity starts at 0.5 Mt immediately and rises to 2 Mt during CPC expansion, which is underway and expected to complete over the next three years. Completion of the agreement also provides for exemption from export custom duties for the Karachaganak project until 2038, the remaining 26 years of the FPSA term; and final agreement on all tax and customs matters up to the end of 2009.