ALMATY, Kazakhstan (AP) — Kazakhstan concluded the acquisition Thursday of a 10 percent stake in one of the largest oil and gas projects in the world.
The acquisition comes after two-years of negotiations with the international consortium developing the field in the Central Asian nation.
Britain's BG Group, which remains one of Karachaganak project's main shareholders with a 29.25 percent stake, said in a statement that Kazakhstan paid $2 billion in cash. Kazakhstan is liable for a further $1 billion non-cash payment.
Kazakhstan's interest in Karachaganak will be run by state energy company Kazmunaigas.
Karachaganak has been plagued by numerous government probes over environmental violations and faced insistent pressure from Kazakh authorities to allow them into the project.
"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," BG Group vice president Ashley Almanza said in the statement.
The other partners are Italy's Eni, which now owns 29.25 percent, Chevron with its 18 percent stake, and Russia's LUKOIL, which has a 13.5 percent holding.
Karachaganak, which is located in northwestern Kazakhstan near the border with Russia, is estimated to hold around 1.2 billion tons in oil reserves and 1.35 trillion cubic meters of natural gas.
Under the deal finalized Thursday, the project will be allocated an additional annual 2 million tons of capacity through the Caspian Pipeline Consortium oil pipeline over the next 26 years.
Exports will be exempt from custom duties over that same period, BG Group said.
The next phase in the project's development is expected to see gas output double to 38 billion cubic meters per year.
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