Astana: India acquired 25 per cent of an oil block in Kazakhstan on Saturday, in a deal aimed at boosting its energy security and helping fuel fast economic growth.
India, which strongly depends on oil imports, has been less successful than its energy-hungry economic and political rival China in tapping the vast energy resources of former Soviet Central Asia. A quarter of Kazakhstan's oil production is Chinese-owned.
Kazakhstan, Central Asia's largest and most successful economy, has to date attracted more than $120 billion in foreign investment, mainly to its key oil and gas sector, and metals.
The mainly Muslim nation of 16.4 million, which covers an area five times the size of France, holds about 3 per cent of the world's recoverable oil reserves and has doubled its crude output to about 80 million tonnes over the past decade.
Under the deal, signed by state-run Oil and Natural Gas Corp Videsh Ltd (OVL) and Kazakh state oil firm KazMunaiGas (KMG), OVL secured a quarter in the Satpayev offshore block in the Caspian Sea. OVL will pay KMG an $80 million signing bonus.
"Besides the bonus, it is an advantage for KazMunaiGas that the entire exploration programme will be funded by the Indian side, which is acquiring 25 per cent in the block," Kazakh Oil and Gas Minister Sauat Mynbayev told reporters.
He did not disclose the total value of the deal. Indian mass media wrote this week that Delhi had approved a total investment plan of $400 million for the Satpayev block.
"I can only say that the main payment will depend on the results of exploration that is, on the block's potential reserves," Mynbayev said.
The two sides gave no estimates for Satpayev's reserves. Kazakh and Indian media, quoting government and industry sources, had named a figure of some 250 million tonnes of oil equivalent.
The Hindustan Times reported this week that a peak output of 287,000 barrels per day (14.3 million) is envisaged from the field. It gave no timeframe.
Kazakh President Nursultan Nazarbayev and Prime Minister Manmohan Singh, who oversaw the signing of the deal, had "agreed to cooperate further in oil exploration, development and processing", Nazarbayev's office said, giving no details.
Kazakhstan, the world's largest uranium producer, will also cooperate with India in civilian use of nuclear power, Nazarbayev said. "India plans to raise five-fold electricity output at its nuclear power plants," he said.
"Therefore, it is very important to us to supply (annually) more than 2,000 tonnes of uranium by 2014, as well as to reach agreement later on (spent nuclear fuel) processing."