Karachaganak Natural Gas Plant to Cost $3.7 Billion, Kazakhs Say

Kazakhstan plans to spend $3.7 billion on a natural gas processing plant at the BG Group Plc- led Karachaganak field next year as it seeks to supply the fuel to its domestic market.

The facility will supply the capital Astana and northern regions by 2017, state-owned KazMunaiGaz National Co. said today in an e-mailed reply to questions today. It may be expanded from 2019 to 2021 and have a capacity of 5 billion cubic meters a year, or more than half the country’s demand in 2011.

Kazakhstan last year acquired 10 percent of the Karachaganak oil and gas project after more than two years of disputes over tax payments and recovery costs, opening the way for the field’s expansion, estimated by KazMunaiGaz to cost $14.5 billion in 2010. The Oil and Gas Ministry plans by July to agree with Russia on creating a joint venture at the Orenburg plant in Russia, which imports gas from Karachaganak, adding that the agreement must “take into account” the building of the Kazakh facility and the oilfield expansion, it said on its website.

To contact the reporter on this story: Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net