Kazakhstan on Wednesday approved a plan to lend state oil and gas company KazMunaiGas $4 billion from its windfall oil fund to help develop the massive Kashagan oilfield in the Caspian Sea.
The National Fund, which held more than $45 billion at the end of last month, will issue bonds to help KazMunaiGas finance its participation in Kashagan, the biggest oil discovery in more than 40 years.
The funds will be disbursed in two tranches, the first in 2013 and the second in 2015, a statement issued by the presidential office on its website, www.akorda.kz, showed.
Spending from the National Fund must be approved by a council chaired by President Nursultan Nazarbayev, who has ruled Kazakhstan since 1989, two years before the country gained independence from the Soviet Union.
Kazakhstan, Central Asia's largest economy, holds more than 3 percent of the world's recoverable oil reserves and is the second-largest producer in the former Soviet Union after Russia.
The state joined the consortium developing the Kashagan project in 2005 and has since doubled its stake to 16.8 percent. The offshore field, which faces significant technical challenges, is scheduled to produce its first oil at the end of 2012 or early 2013.
"Our participation in this project is imperative in the future. Besides our stake, the physical oil itself is important for Kazakhstan," Prime Minister Karim Masimov told a government meeting.
Other members of the Kashagan consortium include Eni , Royal Dutch Shell, Total, ConocoPhillips, ExxonMobil and Inpex.
Nazarbayev used his annual state-of-the-nation address last month to unveil a series of major investment projects that would draw on resources from the National Fund.
During the last wave of global economic crisis, Kazakhstan spent approximately $10 billion from the fund. In late 2008, the cost of a barrel of Brent crude dropped below $40 compared with more than $120 today.
