Italy’s Eni Gets 50% Stake In Kazakhstan Oilfield

The Italian oil company Eni has finally taken control of a 50 percent stake in Kazakhstan’s offshore Isatay oil block, located in the Caspian Sea.

"The conclusion of this transaction signals the start of the operation of a new operating company that will use the advanced technologies of Eni, the world leader in geological exploration with extensive experience in the complex technical and environmental conditions of the Caspian shelf,” the press of the Energy Ministry of Kazakhstan reported on December 22.

The agreement enters Eni into a partnership with the state-owned oil and gas company of Kazakhstan, KazMunayGaz (KMG). Eni will have subsoil use rights in the Isatay block for exploration and production of hydrocarbons, including the finalization of related commercial contracts. Kazakhstani law will regulate Eni’s performance of what are technically joint operations. Isatay Operating Company, a 50-50 joint company set up by Eni and KMG, is responsible for the operation.

The Isatay block is located in Kazakhstan’s sector of the Caspian Sea, just 45 km (28 mi) north of the coast of the Bozashi Peninsula, where the depth of the water is only four to eight meters.

Eni’s stake in the Isatay block were signed in 2016 as part of a strategic agreement between Eni and KMG, which also calls for the joint development of a shipyard project in Kuryk, located along the Caspian Sea coast of Kazakhstan’s western Mangystau region.

Eni’s persistence in clinching the Isatay deal is likely due to the block containing hydrocarbons that are relatively easy to extract, due to the simple geological structure of the oil- and gas-bearing layers, according to preliminary research.

Eni’s most recent venture in the Caspian and Central Asia regions country is not its first: it is also a joint operator of Kazakhstan’s Karachaganak field, in which it has a 29.25 percent stake, and has shares in various other projects in the Caspian Sea.

Its interests in the Kashagan field, where Eni has 16.88 percent share, are arguably its most financially important, as Eni plans to extract 370,000 barrels of oil per day (bpd) from it in 2018.

Discovered in 2000, the Kashagan oil field is said to be one of the largest in the world. Its total oil reserves are estimated to be 38 billion barrels, of which between 10 and 11 billion barrels are recoverable. Its natural gas reserves are over one trillion cubic meters. The combined safety, engineering, logistical and environmental challenges make it one of the largest and most complex industrial projects currently being developed anywhere in the world. Artificial islands were created to protect drilling platforms from storms and ice.

After extraction began in 2013, almost immediately a major accident occurred, setting operations back five years and bringing the cost of the project from $38 billion to $53 billion. Output is finally expected to come online sometime this year.