Kazakhstan has formally initiated a process to acquire Lukoil's oil and gas assets within the country, invoking a pre-emptive right to increase state interests in key developments. This move follows Lukoil's decision to sell foreign assets after being sanctioned by the US in October due to Russia's war in Ukraine.

Key Assets and Negotiation Status

The Kazakh authorities have applied to the US Office of Foreign Assets Control for permission to begin negotiations, with a deadline extended to 28 February. The targeted assets are central to Kazakhstan's energy sector. Lukoil holds a 5% stake in the giant Tengiz field, which, after recent upgrades, aims for a plateau production of about 1 million barrels of oil equivalent per day. Production, halted after a January power accident, is expected to ramp back up to that level within a week. Lukoil also owns a 13.5% stake in the Karachaganak field, Kazakhstan's third-largest producer, providing it an equity share of roughly 35,000 barrels per day.

Additional Strategic Holdings

Beyond the major fields, Lukoil's assets include a 12.5% interest in the Caspian Pipeline Consortium (CPC), which handles approximately 83% of Kazakhstan's oil exports. A more complex asset is the offshore Kalamkas-Khazar development in the Caspian Sea, where Lukoil holds a 50% operating interest. This greenfield project, similar to the company's Russian Caspian platforms, is slated for first oil in 2029.

Purchase Considerations and State Involvement

The government is evaluating various purchase options, including direct cash payments, deferred payments, or funding the acquisition from project-related oil and gas sales proceeds. The state-run company KazMunayGaz is designated to act on the government's behalf in such acquisitions. It already holds stakes in these ventures (20% in Tengiz, 10% in Karachaganak, 20.8% in CPC). Acquiring Lukoil's share in Kalamkas-Khazar would give KazMunayGaz 100% ownership, along with operatorship and full responsibility for the project.