Minutes of direct negotiations and memorandum of understanding for Zhenis Project signed

On 18 February 2019 a three-party meeting was held in Astana among Kanat Bozumbayev, the Kazakh Minister of Energy, Alik Aidarbayev, the Chairman of the Management Board at JSC NC “KazMunayGas”, and Vagit Alekperov, the President of LUKOIL PAO.

During the meeting, the minutes of direct negotiations on granting the right to explore and produce hydrocarbons were signed within the framework of joint development of Zhenis offshore area in the Kazakh sector of the Caspian Sea as well as the memorandum of joint cooperation on mutual understanding between the Ministry of Energy, KMG and LUKOIL (LUKOIL Kazakhstan Upstream LLP).

Following the negotiations, agreements were reached on paying a subscription bonus in favor of the Kazakh partner (one-time fixed payment by the subsoil user for the acquisition of subsoil use rights in the contract area - Tax Code of the Republic of Kazakhstan) and on the subsoil user’s obligations for local content in personnel (50% are managers, 80% are heads of business units, 90% are mid-level experts, and 100% are skilled workers), and at least 50% in works and services.

The next phase of cooperation will be the signing of a contract for the exploration and production of hydrocarbons in the Zhenis area.

It is worth reminding that on 5 June 2018 KMG and LUKOIL signed an Agreement on principles for the Zhenis project, according to which the main conditions for joint exploration were fixed. On 30 November 2018 the Joint Operating Agreement and the Financing Agreement were signed between the companies.

KazMunayGas and LUKOIL have been strategic partners over the last several years and have been implementing a number of joint projects.