KazMunayGaz (KMG) has announced a natural gas discovery at the Karaton Podsolevoy block, located near Kazakhstan's giant Tengiz oilfield. The discovery is notable as the acreage was historically considered unpromising during the Soviet era despite its proximity to Tengiz.

Discovery and Well Details

Following the completion of the first exploration well, designated SG-8, flow tests resulted in free-flowing gas production. The well reached a depth of 5,750 metres, penetrating a high-pressure subsalt formation. The gas flow is rich in hydrogen sulphide, a characteristic also seen in production from the deep subsalt reservoir at the nearby Tengiz field. Before testing, the reservoir formation was fractured by the services company SLB. KMG has not disclosed the well's estimated productivity or an updated reserve estimate for the deep reservoir.

Project and Partnership

The well was drilled by the Karaton Operating joint venture, a 50:50 partnership between KMG and Russia's Tatneft. Drilling operations, which began in November 2024, were managed by KMG's contractor, KMG Drilling & Services. The project was financed by Tatneft under an earlier joint operating agreement, with Tatneft having paid $18.2 million for its 50% stake. It is noted that the UK sanctioned Tatneft in December 2025, though the company has avoided U.S. sanctions imposed on other Russian producers.

Location and Historical Context

The 4,000 square kilometre Karaton Podsolevoy block lies north of the Tengiz field and near its smaller Korolyovskoye deposit. The block's subsalt layer was the focus of Soviet geological efforts between 1975 and 1979, during which five deep exploration wells were drilled but were unsuccessful, yielding no oil or gas flows. In a more recent effort, KMG financed extensive 3D seismic surveys between 2012 and 2016, covering about 1,500 square kilometres of the block.

Future Plans and Strategic Context

Following the drilling of the first well, a second exploration well, SG-9, is planned to a depth of 6,000 metres to assess the potential of Devonian formations. KMG stated it will provide information on the start of drilling for SG-9 in due course. This discovery aligns with KMG's broader strategy to target both previously explored and unexplored areas in Kazakhstan to identify potential greenfield projects for development in partnership with Chinese, Russian, and Western companies.