OREANDA-NEWS. On 31 December 2008 was announced, that the Kazakhstan Authority and all co-venturers in the international Consortium under the North Caspian Sea PSA Production Sharing Agreement (Eni, ExxonMobil, KazMunayGas, Shell, Total, ConocoPhilips and INPEX) have reached a final agreement on the new way forward for the development of the Kashagan project.

Under this agreement :

JSC NC KazMunayGas (KMG) acquires a greater participation going from 8.33% to 16.81% making the co-venturers interest in the North Caspian Sea PSA (NCSPSA) approximately as follows:

Eni 16.81%

ExxonMobil 16.81%

KMG 16.81%

Shell 16.81%

Total 16.81%

ConocoPhilips 8.40%

INPEX 7.56%

Given the size and complexity of the Kashagan project and other NCSPSA developments, the co-venturers and the Authority have agreed to combine their strength and resources and to carry out the project execution as follows:

Eni will retain responsibility of the execution of the Experimental Program (Phase 1) of the Kashagan Project.

For Phase 2, co-venturers managing project execution will be Shell for the offshore development, Eni for the onshore plant and ExxonMobil for the drilling.

Shell will manage the production operations after the start up of Phase1 with KMG progressively assuming greater responsibility.

To carry out their responsibilities, Eni, Shell and ExxonMobil will have appropriate authority on matters such as staffing, procurement, operating procedures and they will apply their own companies’ management systems.

KMG will take on an increasing role in the project and will be involved in each step of its development.

A new joint operating company for the NCSPSA is created comprising all the co-venturers in the NCSPSA Consortium with their respective participating interests.

The joint operating company is named North Caspian Operating Company (NCOC) BV, and will take over the responsibilities which are currently with Agip KCO as the sole operator of the NCSPSA. NCOC will overview all activities, manage planning, coordination, reservoir modelling, conceptual studies and early development plans, government interfaces for the whole venture.

The Managing Director of the new joint operating company NCOC will be on rotation among the Partners and this role is initially fulfilled by a Total executive while the Deputy Managing Director is a KMG executive. The NCOC will be staffed by representatives of all partner companies and will be run largely in line with the Total Company management system.

According to a transition plan that is being prepared by NCOC the transfer of operatorship from Agip KCO to NCOC should take place in January 2009.

Target date for start of production from Phase 1 is end 2012. When reached; Phase 1, Tranche 1 and 2 plateau production will be 300,000 barrels of oil per day with the operation of the gas injection and will further increase to 450,000 barrel of oil per day capacity with the shared use of additional injection facilities which will come on stream at the beginning of Phase 2. Kashagan Full field development should reach a plateau of 1.5 million barrels of oil per day towards the end of the next decade.