(EnergyAsia, June 29 2012, Friday) — The Kazakhstan government has agreed to pay a Western consortium US$2 billion for an immediate 10% stake in the development of the country’s Karachaganak condensate and gas fields that is shaping up to be one of the largest upstream projects in the world.

In a statement, key shareholder UK’s BG Group, which holds a 29.25% stake after the June 28 deal, said the Kazakhstan government has paid US$2 billion in cash and will be liable for another $1 billion non-cash payment.

State energy firm KazMunaiGas (KMG), which participated in the two-year negotiation for Kazakhstan’s stake, will represent the government in the re-constituted project whose other stakeholders include Italy’s Eni (29.25%), US major Chevron (18%) and Russia’s LukOil (13.5%).

As part of the deal concluded in Almaty, the Kazakh capital, the partners agreed to allocate an additional annual two million tons of capacity through the Caspian Pipeline Consortium oil pipeline through 2038.

Located in the country’s northerwestern region near the Russian border, Karachaganak is thought to hold around 1.2 billion tons in oil reserves and 1.35 trillion cubic metres of natural gas.

Ashley Almanza, BG Group’s executive vice president, said: “With this agreement in place the partnership can now move forward with new field development plans which are expected to unlock enormous value for both the country and the contracting companies.”

Frank Chapman, BG Group’s CEO, said: “We welcome the Republic of Kazakhstan and KMG into the Karachaganak contracting companies group and look forward to working with all of our partners to capture the significant remaining potential of the giant Karachaganak field

With KMG’s involvement, the consortium will look to smoother implementation of the project that had long been troubled by government investigations into alleged environmental violations and tax disputes. The consortium is confident of eventually doubling the field’s annual gas production to 38 billion cubic metres.