China National Offshore Oil Corporation signs exploration contract with Kazakhstan

Kazakhstan’s Energy Ministry, national oil and gas company KazMunayGas (KMG), and CNOOC Hong Kong Holding Limited—a subsidiary of China National Offshore Oil Corporation (CNOOC Limited)—have signed a contract for hydrocarbon exploration and production under the Zhylyoi project.

The agreement on the Zhylyoi project—located in the transit zone of the northeastern Caspian Sea—was signed by Deputy Energy Minister Kudaibergen Arymbek, KMG First Deputy Chairman Kurmangazy Iskaziyev, and CNOOC Limited Vice President Liu Yongjie, representing CNOOC Hong Kong Holding Limited.

"This event marks a significant milestone in the strategic partnership between Kazakhstan and China in the oil and gas sector. With this geological exploration project, major Chinese company CNOOC is making its first investment in Kazakhstan," - KMG said in its statement.

The partnership for the Zhylyoi project considers a 50-50 joint implementation, with CNOOC financing the exploration phase. 

The Zhylyoy Subsoil Area spans roughly 958 square kilometres, straddling both the Atyrau region of western Kazakhstan and a portion of the country’s Caspian Sea waters — a geologically rich area that has attracted upstream investment from international players over the past two decades.

Under the terms of the deal, the first stage of the exploration period will last for nine years, during which the partners are expected to carry out geological studies and drilling to assess the block’s commercial potential.

The two parties shall establish a joint operating company and act as the operator.

According to the contract minimum goals are expected as following

- conducting 3D seismic exploration over 400 square kilometers (field visits, data collection and interpretation); 

- reprocessing of archived 2D seismic data over 400 line kilometers;

- drilling a supra-salt exploratory well to a depth of 2 kilometers,

- drilling a subsalt exploration well reaching 4.5 kilometers, depending on the results of the 3D seismic analysis.

The terms of the Zhylyoi project were agreed upon by KMG and CNOOC in late April.

KazMunayGas (KMG) serves as Kazakhstan’s national operator for hydrocarbon exploration, production, refining, and transportation, representing state interests in the oil and gas sector.

CNOOC, a global leader in offshore exploration and production, operates major projects in over 20 countries worldwide.

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