Russian privately held oil producer Lukoil has become the first foreign investor to agree to new operating terms approved by authorities in Kazakhstan in January.

Luckoil has authorised its partner, Kazakh state oil and holding KazMunayGaz, to agree what is described as a standardised exploration and development contract for a large offshore block in the country’s sector of the Caspian Sea.

Under the deal signed in Astana on Monday, KazMunayGaz and Lukoil take on a project to explore and develop the Kalamkas-more block.

Besides an already discovered oilfield of the same name, the licensed shallow-water acreage also includes two more deposits — Khazar and Auezov, with estimated total recoverable reserves of 510 million barrels of oil and some 9 billion cubic metres of natural gas.

According to a statement from the Kazakh Energy Ministry, KazMunayGaz and Lukoil have agreed to pay $32 million as a signature bonus, and have also committed to invest up to $6 billion into the project.

Kazakh authorities expect the two partners to proceed to preparations for the development of the fields as soon as possible, as first oil production is hoped to be seen as early as 2028.

Kalamkas-more and Khazar were part of a larger Kashagan development block until 2019 when the international operating consortium developing Kashagan opted to return the deposits to the government after being unable to agree upon suitable development options for the assets, expected to be capable of delivering a profit.

The two deposits, which are located about 30 kilometres apart, are in water depths of just seven to nine metres in the Caspian Sea. However, installation of any structures in this sea area is challenged by strong ice movements during winter months.

Earlier exploration drilling at the Kalamkas field was conducted by creating subsea stone mounds to enable installation of a drilling barge on top to hold it securely at the drill site.

The Energy Ministry said the government acknowledges the licensed block is a “challenging offshore asset”, hence Lukoil will be provided with a “temporary package of regulatory and fiscal priviledges”.

The ministry said that terms of the standardised contract Lukoil agreed to use will be applicable to other oil and gas projects in the country, with its general terms being open for perusal by potential investors into the country’s energy sector.

According to these terms, the operator of the licensed block will receive temporary relief from paying a crude-oil export tax when shipping its production to international markets.

Despite seeing challenges in Europe in the result of international sanctions against Russia and its corporations, Lukoil remains active in offshore exploration and development projects in Kazakhstan, recently restarting exploration drilling at the Zhenis block where its partner is also KazMunayGaz.

Last week, members of the European Parliament adopted a resolution calling for European authorities to speed up another round of sanctions against Russian corporations in response to Moscow’s invasion of Ukraine.

The European Parliament also called for the sanctioning of companies such as Lukoil and Russian state nuclear holding Rosatom, which are still present in the EU market.

Hand shake: Kazakh Energy Minister Bolat Akchulakov (left) and KazMunayGaz executive board chairman Magzum Mirzagaliyev at the Kalamkas block signing in Astana on 6 February 2023. Photo: KAZAKHSTAN ENERGY MINISTRY