Kazakhstan May Pay Up to $1.1 Bln for Karachaganak

Kazakhstan is willing to pay up to $1.1 billion to enter the international consortium developing the Karachaganak gas field and settle a protracted ownership dispute, the head of its sovereign wealth fund said on Wednesday.

Timur Kulibayev, chief executive of the Samruk-Kazyna fund, told a news conference that Kazakhstan planned to acquire a 10 percent stake in the field, operated by BG Group and ENI , ahead of a challenging third phase of development.

"I will tell you the range, it's between $700 million and $1.1 billion," Kulibayev later told reporters.

"There are two phases there -- the first one is the settling of disputable issues," he said. "Then the second phase will follow -- commercial negotiations on the (stake) purchase."

Kazakhstan, Central Asia's largest economy, has become more assertive over its natural resources in recent years and has sought to revise agreements struck with foreign energy companies when it lacked cash after the Soviet Union's demise.

The government has long expressed a desire to join the international consortium that operates the Karachaganak field in northwestern Kazakhstan, which contributes 49 percent of the gas produced by the country and 18 percent of its crude oil.

"In principle, we plan to complete all our discussions by the end of the year," Kulibayev told the news conference.

"In general we have taken the decision that KazMunaiGas will enter the Karachaganak project as a partner holding a 10 percent stake."

Kulibayev, who is married to the middle daughter of President Nursultan Nazarbayev, was appointed head of Samruk-Kazyna after the president won re-election in April. The fund is the owner of KazMunaiGas, the state oil and gas company.

Kulibayev, who is also chairman of KazMunaiGas, said the deal to enter the Karachaganak project would be "a package agreement".

"We name the price (range), depending on how the talks will be completed by the (Kazakh oil and gas) ministry," he said. "But we hope the ministry will finish them soon, and in the near term we will be able to proceed with commercial talks."

Chris Finlayson, BG's executive vice-president and managing director for Europe and Central Asia, said on Tuesday that talks were constructive and that he expected a resolution by the end of the year.