Kazakhstan gains10% Stake in Karachaganak

    The Karachaganak consortium has agreed to give Kazakhstan a 5% stake in the project to settle disputes that have been ongoing since December 31, 2009. Another 5% share will be sold at market price.
    "If we speak of the interests of the Republic of Kazakhstan, we received 5% in exchange for settling all claims on part of the government regarding tax and customs. We bought another 5% for $1 billion, not including taxes. As a result, KazMunaiGas became a member of the project with a 10% share," said Minister of Oil and Gas Sauat Mynbayev in a government session following the signing ceremony on Wednesday.
    In addition, the parties involved agreed to apply an agreed-upon mechanism to control costs, which will allow Kazakhstan to increase its control over costs that arise during the implementation of major investment projects in the field.
    Kazakhstan and the consortium have reached several important agreements to achieve maximum clarity on issues such as taxation, customs fees, and the reimbursement of expenses.
    Kazakhstan has confirmed the concept of tax stability in contracts with Karachaganak consortium. As Kazakhstan is joining the project as a participant, the country has agreed to provide an additional relevant quota for the Caspian Pipeline Consortium at 0.5 million tons per annum with a further increase of up to 2 million tons per year.
    The final completion of the transaction depends on both parties fulfilling certain conditions, and must occur within H1 of 2012.
    All agreements come into force at the time of closing, according to KazTAG.