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. Last Updated: 07/27/2016

Kazakhstan, Turkey Sign $750M Deal

ALMATY, Kazakhstan -- Kazakhstan came one step closer to its dream of becoming a major oil power Tuesday when it signed a $750 million deal with Turkey's state-owned oil company to develop oil reserves near the Caspian Sea.

"This is a very good contract. It has undergone thorough examination," said Kazakh acting Prime Minister Akhmetzhan Yesimov as he signed the contract with Turkiye Petrolleri A.O.

"The level of direct foreign investment will exceed $750 million," an official statement issued to reporters said.

It said the deal would pump around $1.8 billion into Kazakh government coffers over the life of the contract.

TPOA will pay the Kazakh government $3 million as a signing bonus and another $2 million toward the costs of building the new Kazakh capital in Akmola.

Under the contract, TPOA and Amoco will set up a joint venture, each with a 50 percent share, to finance the project.

"We have done technical work together in Kazakhstan. We feel we are good partners," said Ray Leonard, vice president and resident manager of Amoco Kazakhstan Petroleum Company.

The contract area covers 357,885 hectares and is in the former Soviet republic's northwestern Aktyubinsk region near the Caspian Sea. There is no concrete data on the area's oil reserves.

"In preparing the contract we estimated at least 45 million [metric] tons for the area's reserves," said Kylyshbek Imanbayev, head of the licensing and contracts department at Kazakhstan's state geology committee.

He said the two companies would explore the area for four years with initial production estimated to last another 25 years. If the reserves top 100 million tons, production could last a further 20 years.