World's Energy

5 December 2008 - Upstream OnLine - US ConocoPhillips and the United Arab Emirate's Mubadala will pay Kazakhstan a $100 million signing bonus as part of a deal to buy a stake in a Kazakh offshore oil block, officials said today. ConocoPhillips and Mubadala agreed in October to buy 24.5% each in a Caspian block known as "N" from Kazakh state energy compnay KazMunaiGaz, have not given details of the deal. "According to the agreement, our foreign partners will pay a signing bonus of $100 million," Reuters quoted KazMunaiGaz chief executive Kairgeldy Kabyldin as telling reporters after the three companies signed another provisional agreement in Almaty. He declined to say how much the two would pay in total. The final deal will be signed early next year after the contract is changed from a production sharing agreement to a concession, Kabyldin said. The change means companies will be subject to higher taxes and all future tax law changes. The "N" block, previously known as Nursultan, is estimated to hold 2.1 billion barrels of recoverable oil reserves, Kabyldin said. "We plan to launch commercial production in 2016 if all current hydrocarbon reserve estimates are confirmed," he said. Kabyldin said foreign partners would finance all exploration costs and pay a discovery bonus if drilling is successful.