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Kazakhstan: Uzen Oil Field Tender Reaching Final Stage

Almaty, 26 November 1996 (RFE/RL) -- The Kazakh authorities are nearing the final stage of the lucrative tender for redevelopment and expansion of the Uzen oil field in west Kazakhstan.

Of the original 93 companies which competed in the first stage of the tender, only three giants are still in the running. They are the U.S. Amoco company, the Chinese National Petroleum company (CNPC) and Petronas, the National Petroleum Company of Malaysia.

The Uzen field lies just north of the vast Tengiz oil field and although it has been in production in a limited way since the Soviet era, it is considered to have a much greater potential.

Kazakh officials are today holding a key series of hearings with the three competing companies. All three companies are offering 50 percent participation in the project, with Kazakhstan holding the other half. Amoco is offering an initial five-year investment of $636 million, increasing to a total of $1.3 billion in the following period.

As a further prod, Amoco says that participation in Uzen could influence its involvement with six other Kazakh projects, including the improvement of refining facilities at Shymkent in the south of the country and Pavlodar in the north. An RFE/RL correspondent reports from Almaty that the scale of Amoco's presence in Kazakhstan probably accounts for why it was allowed to take part in the second stage of the tender when it was not among the original tender applicants.

The other two competing companies are offering basically similar packages, for instance Petronas foresees an initial investment of $531 million rising to a total of $1.3 billion. For the Uzen bid, the Malaysian company is in a consortium with UNOCAL of the United States, which is already engaged in the Kazakh oil industry.

For its part, CNPC speaks of over $1 billion for the first stage, but does not define later investment. Our correspondent noted this is the first time that a Chinese company has sought involvement in the Kazakh oil industry on such a scale.

The first stage of the project foresees upgrading of the present Soviet-era facilities, and the second an extensive exploration with a view to expanding production.

The Uzen field is badly in need of modernization. It already has a reasonable level of general infrastructure, such as roads and a railway, but the oil installations are antiquated and inadequate. As Uzen borders on the rich Tengiz and Caspian fields, experts believe it has the potential to deliver much more crude than is at present pumped.