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. Last Updated: 07/27/2016

Kazakh Prices Settled With Gazprom

Gazprom and a Western-led venture tapping a huge Kazakh gas field have agreed on pricing after years of talks paving the way for Central Asian gas to flow to Russia, Gazprom said Friday.

Gazprom declined to disclose details of the pricing agreement but said the partners had confirmed their earlier plans to process up to 16 billion cubic meters of sulfur-laden Karachaganak gas at Russia's Orenburg plant for 15 years.

Russia and Kazakhstan have been in talks over Karachaganak for several years. The states signed a bilateral declaration last year, under which Kazakhstan's KazMunaiGaz state energy firm and Gazprom will be 50-50 owners of the Orenburg plant and will invest $1.5 billion in its expansion.

But both Gazprom and KazMunaiGaz have said they needed first to persuade Karachaganak's operators to sell gas at mutually acceptable prices before the venture starts working.

Karachaganak is co-led by Italy's Eni and Britain's BG, which hold 32.5 percent stakes each, while U.S. Chevron owns 20 percent and LUKoil has a 15 percent interest.

Russian media have reported that the Karachaganak partners were not prepared to sell gas at low prices and would prefer to continue focusing on gas condensate production, which is exported to Novorossiisk.

KazMunaiGaz has said it would like to deliver some 6 bcm a year of the processed Karachaganak gas back to the Kazakh market, paying $54 per 1,000 cubic meters to the venture.