Today, at the Gazprom Headquarters, Alexey Miller, Chairman of the Gazprom Management Committee, Bakhytkozha Izmukhambetov, Energy Minister of the Republic of Kazakhstan and Uzakbai Karabalin, President of KazMunayGas National Company inked a Protocol on the cooperation terms for 2007.

The Protocol identifies the terms and retains the existing rate of gas transit across the Republic of Kazakhstan. The Protocol also determines the terms of gas supply from the Karachaganak field to the Orenburg Gas Processing Plant. Furthermore, the Protocol fixes the terms of gas deliveries to Kazakhstan’s internal market, including through cross supply.

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The Republic of Kazakhstan possesses some 2 tcm of the explored natural gas reserves, with the undiscovered natural gas resources, including the Caspian offshore, valued at 8.3 tcm.

In recent years domestic gas production and consumption in Kazakhstan has annually averaged 12 and 5 bcm, respectively. Pursuant to a development program for Kazakhstan’s gas industry, by 2020 gas extraction is scheduled to be boosted to 40 bcm per year, with exports to potentially increase as well.

In June 2002, Gazprom and the KazMunayGas National Company founded the 50/50 Kazakhstan-based KazRosGaz joint venture dealing with natural gas procurement, marketing and processing at Russian plants as well as with other activities.

The bilateral cooperation between Gazprom and Kazakhstan’s companies hinges on the following major joint businesses:

• processing of the Karachaganak gas condensate field feedstock at the Orenburg Gas Processing Plant;
• services provided by Gazprom’s affiliates to ensure Kazakhstan’s gas transit across the Russian Federation to the CIS;
• supply of Russian natural gas to Kazakhstan’s Kostanai province;
• transit of Central Asian gas through the Republic of Kazakhstan in increasing volumes as stipulated by existing long-term agreements.

In September 2006, the Gazprom Board of Directors approved setting up on a par with KazMunayGas a Russia-Kazakhstan joint venture based on the processing capacities of the Orenburg Gas Processing Plant.

The new joint venture will process hydrocarbon resources of the Orenburg Oblast and Karachaganak field on a processing fee basis. Creating the joint venture on the platform of the Orenburg GPP and boosting Karachaganak gas processing volumes will help secure the full loading of all existing and new upgraded capacities in the long term. The maximum processing amount (30.6 bcm including 15 bcm of gas from the Karachaganak field) will be reached in 2012.