Caspian Holdings, the shallow field developer focused on Kazakhstan, has had some encouraging news this week, as it looks to complete regulatory approvals to recommence production and exports at the Zhengeldy oil field in Kazakhstan.
After three months of bureaucratic wrangling with the MEMR (Ministry of energy and Mineral Resources), it appears their may be some light at the end of the tunnel, despite fears their contract had been terminated.
On August 26, Caspian Holdings received a letter from the MEMR stating, “the contract 385, Zhengeldy Sub Soil Use Contract (SSUC), for the production of hydrocarbons at the oil field Zhengeldy in the Aturay region, in connection with the considerable violations of the obligations established by the Contract and the Work Programme – is terminated in unilateral way and stopped the activity of the License.”
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However, since receiving the letter the company has obtained a more positive outlook from the Kazakh council, saying the company had 60 days to seek to set aside the termination of the contract.
It now appears that the latest letter is in conflict with an earlier letter received from the Committee of Geology at MEMR, and under the current SSUC that the company has with the Kazakhstan state, the Ministry does not have the right to terminate the contract without a Kazakh Court ruling and appropriate time thereafter to rectify any default.
The Company has now received preliminary advice that its prospects if such proceedings are commenced are high and that its contractual obligations under the SSUC should be upheld and production at the Field recommenced.
“Despite this recent set back, we remain cautiously optimistic that we can reinstate full contractual rights and later this year return to oil production from the Zhengeldy field. It is important for Kazakhstan that even relatively small fields are returned to oil production if the Country is to reverse the recent slowdown in oil production growth,” said Caspian Holdings’ chairman Michael Masterman.
