press release

Texaco Press Release - $ 1 Bn of Contracts Awarded for Karachaganak Development


Almaty, Kazakhstan -Karachaganak Integrated Organisation (KIO), the international oil and gas consortium, and Kazakhoil today announced details of construction award worth just $billion for the Main Works contract to develop the Karachaganak field in Western Kazakhstan.

The event was marked by the signing ceremony in Almaty, involving Contractors, Kazakhoil of Republic of Kazakhstan.

The Main Works contract, which is valued at $ 900 million, was awarded to the CCC/Saipem consortium for construction activities over the next three years. In an address to the KIOGE oil and gas conference in Almaty, General Director John Morrow told delegates that this included a commitment to ensure that at least 40% of the contractual value is to be placed in Kazakhstan for goods and services. He said:

"Karachaganak is the largest current investment project in Kazakhstan and indeed one of the largest field developments in the world. The award of the Main Works contract, together with the Drilling and Workover Contract, which was earlier, awarded to Parker/ Saipem for $160 million, now means that we have all components in place to allow us to move ahead with our development activity.

Details of the awards are as follows:

- Main works CCC/Saipem

The construction of processing and utility systems (KPC, Unit2) to increase liquid production to 9 million tonnes per year and to provide annual gas re-injection capacity to 6.5 billion cubic meters.

The construction of an export pipeline from Karachaganak to Atyrau for entering into the Caspian Pipeline Consortium (CPC) pipeline for onward transport to Novorossiysk.

- Drilling and Workover Saipem/Parker Drilling (SaiPar)

A three-year contract for the supply of six rigs, three for drilling and three for workover activities. A technical alliance and subcontract has been agreed with Kazakhoil Drilling to provide one of the three-workover rigs.

The total Karachaganak workforce is currently around 8.100 thousand, of which over 7 000 is Kazakhstani. In 2001/2002, the workforce is estimated to increase to approximately 14.000.

KIOs commitment to Kazakhstan is underpinned by a series of major local infrastructure projects, which form part of the current Development (Phase Two) Plan. These include the construction of new roads, 30kms of railway, a new power station and the refurbishment and installation of water facilities. It also provides $10 million a year in social projects in the Western-Kazakhstan Oblast.

On 6 September, the KIO Management team moved their Headquarters from London to take up permanent residence next to the Karachaganak site in Aksai. John Morrow is joined by fellow directors:

Mario Becherucci Operations and Deputy General Director

Elliot Dubisson Development Director

Bob Smith Marketing Director (Moscow, London)

Pavel Kaufman Finance Director

Giovanni Zinnato Services Director

Jack Hinton Health, Safety and Environmental Director

Updated: October 2000