Kazakh Prime Minister Danial Akhmetov, Lukoil President Vagit Alekperov and management from KazMunaiGaz discussed cooperation to develop the Caspian's hydrocarbon resources, ahead of a visit to Kazakhstan by Russian President Vladimir Putin.

A statement on this was issued by the Kazakh government's press service. During the meeting the sides discussed "a number of issues connected with preparations for the signing of an agreement between KazMunaiGaz and Lukoil for the joint development of the Tyub-Karagan and Atashskaya fields, during the official visit by Vladimir Putin," the press releases said.

Akhmetov said the agreement is "one of the first significant Kazakh-Russian oil projects in the Caspian, from which both countries expect to receive an effective result."

The Kazakh prime minister also said that both sides "have their interests" in implementing this project, and called on the Lukoil representative "to begin its implementation quickly." In turn, Alekperov thanked the Kazakh government for its support for the project and highly evaluated the professionalism of Kazakh oil companies."

Lukoil and KazMunaiGaz signed an agreement in June 2003 on the principles for cooperation on the Dostyk project, which includes the Tyub-Karagan and Atashskaya fields. The cost of the project is estimated at $3 billion. Investment in geological exploration will amount to about $150 million - $170 million and the Russian side takes on the risks in full. If commercial reserves are discovered, the sides will split exploration and commercial development costs equally.

The Tyub-Karagan and Atashskaya fields are located in the central section of the Kazakh sector of the Caspian Sea. Tyub-Karagan covers an area of 1,168 square meters and is located 40 km northwest of the Kazakh port of Bautino. Atashskaya covers an area of about 8,400 square meters. The northeast and southeast sections of this section border dry land.

The press release said that Lukoil is the second largest private oil company in the world in terms of its proven hydrocarbon reserves. The company accounts for about 1.3% of total world oil reserves and about 2% of total world production. The company plays a key role in the Russian energy sector, accounting to over 20% of Russian oil production and 18% of refining.

(Interfax 09.i.04)