Alexey Miller, Chairman of the Gazprom Management Committee and Uzakbai Karabalin, President of KazMunayGas have signed an Agreement on the major principles for joint venture creation and operation based on Orenburg Gas Processing Plant (Orenburg GPP).

Pursuant to the Agreement, the ownership stakes in the joint venture will be split on a parity basis. A core business activity of the joint venture will be the processing of hydrocarbons from the Karachaganak gas condensate field.

Karachaganak Petroleum Operating B.V. and KazRosGaz have also signed a 15-year Purchase and Sale Agreement for Karachaganak gas. The volume of acquisitions will annually make up 16 bcm. The Agreement stipulates establishing a price formula for gas purchases by KazRosGaz from the Karachaganak field.

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In June 2002, Gazprom and the KazMunayGas National Company founded the 50/50 Kazakhstan-based KazRosGaz joint venture dealing with natural gas procurement, marketing and processing at Russian plants as well as with other activities.

In September 2006, the Gazprom Board of Directors approved setting up on a par with KazMunayGaz a Russia-Kazakhstan joint venture based on the processing capacities of the Orenburg Gas Processing Plant.

The core business activity of the joint venture will be a hydrocarbon processing of the Orenburg Oblast and Karachaganak field on a processing fee basis. Creating the joint venture on the platform of the Orenburg GPP and boosting Karachaganak gas processing volumes will help secure the full loading of all existing and new upgraded capacities in the long term.

Karachaganak Petroleum Operating B.V. is an operating company of the Karachaganak field. KazRosGaz will purchase hydrocarbon resources from Karachaganak Petroleum Operating B.V. and transport the resources for processing by the joint venture. Afterwards the bulk of processed resources will be channeled to the Kazakh market, and the rest to be sold under export arrangements.