Hvalynskoye field territorially belongs to the Northern water surface of the Caspian Sea where the licensed site of «Lukoil-Nizhnevolzhskneft» (license N 11386 of 22.01.03).
The distance to the nearest site of the Russian coast makes up 25-30 m (up to 40 m in the eastern part).
As a result of geological exploration, reserves of gas, condensate and oil in Lower Cretaceous deposits and upper Jurassic deposits were transferred under state ownership.
In accordance with the Protocol of May 13, 2002 to Agreement between the Republic of Kazakhstan and the Russian Federation about delimitation of the bottom of the Northern part of the Caspian sea , with the purpose of enjoyment of rights for subsoil management of July 6, 1988, hydrocarbon reserves development will be shared. The same document provides that Project subsoil management will be implemented in accordance with the Russian Federation law.
Kazakhstani party is entitled for single-source contracting in the project. In accordance with RK Government decree N 637a of May 13, 2002, NC «KazMunayGas» JSC is appointed the Kazakhstan organization authorized to explore and develop hydrocarbon reserves of «Hvalynskoye» field.
On April 18, 2003 the Parties concluded Agreement on shared exploration of oil and gas reserves of the field. On March 14, 2005 NC «KazMunayGas» JSC and NC «Lukoil» JSC established a joint venture «Caspian oil and gas company» Ltd with the purpose of the field exploration.
The Parties commenced the feasibility study of Hvalynskoye field development which will be followed by negotiations with the Government of RF concerning terms of Product Sharing Agreement.
The letter to the Government of the Russian Federation was sent in May 2009 requesting creating Interdepartmental commission on development of subsoil use terms and drafting production sharing agreement (IC – Interdepartmental Commission), as well as on the commencement of negotiations on PSA conclusion on Khvalynskoye field with Draft PSA and PSA feasibility study enclosed.
IC was created on June 10, 2011 by Order #158 of the Ministry of Energy of the Russian Federation. The first Investor meeting (KNGK) with Interdepartmental Commission on review of PSA feasibility study for Khvalynskoye field is scheduled for August 2011.