sell its 16.67 per cent interest to Chinese state duo Sinopec and China National Offshore Oil Corp (CNOOC), the pre- emption rights were exercised. Kazakhstan purchased half (8.33 per cent) of BG's share while other consortium members shared the remaining.
In 2008, a new contract was signed wherein KMG's share was doubled from 8.33 per cent to 16.66 per cent with other partners taking proportionate cuts.
Under Kazakh law, KMG would have the first option to purchase Conoco's stake and in October the company had publicly expressed interest in Conoco's holding. After years of delay and at a total cost of more than USD 40 billion, Kashagan is due to begin production in second quarter of 2012, sources said.
Kashagan holds 33 billion barrels of inplace oil reserves, of which about 10 billion are potentially recoverable. Of this, OVL's share will be 842 million barrels.
The Kazakhstan government has approved first of the three phases and production is likely to start in second quarter of 2013.
At approved peak from phase-1, OVL's share will be close to 1.6 million tonnes, sources said adding over 25-year period the company's share comes to an average of 1 million tonnes per annum.
Kashagan, the biggest world oilfield discovery since 1968, may produce 370,000 barrels of oil per day at peak and in subsequent phases, the output may rise up to 450,000 bpd (22.5 million tonnes per annum).
When Phase 2 and 3 are implemented, the OVL's share will be significantly higher, they added.