PetroKazakhstan carries out all its exploration and production activities in the area of 80,000 square kilometers in South-Turgai basin in the south of Central Kazakhstan. At present, PetroKazakhstan has 5 exploratory license territories with a total area of around 16 thousand square kilometers. In total, PetroKazakhstan has interest in 11 fields.

 

Generally, the productive zones of PetroKazakhstan’s fields are located at a relatively shallow depth, i.e. from 760 to 1,830 meters, though some of the recently drilled wells reached the productive zones to a depth of 2,300 to 3,550 meters. The oil-bearing strata of PetroKazakhstan’s fields have a high porosity and high permeability with light sweet crude having a density of 370 to 440 on API scale, and sulfur content of 0.4% minimum. These favorable characteristics allow PetroKazakhstan to develop its fields, produce and process its crude at low costs.

 

PetroKazakhstan Kumkol Resources carries out a focused search and evaluation of porosity traps which have not been surveyed earlier in the South-Turgai basin. The Company successfully proved the validity of such approach by opening North Nuraly field in 2002.

 

In the course of exploratory operations in North Nuraly in 2009 the RK State Reserves Committee approved the oil and gas estimation as of November 1, 2008. At present, with a view of evaluating the industrial grade oil reserves, examining the fluid content, clarifying the OWC position, and determining the production capabilities, the Company carries out a pilot operation of North Nuraly. This project was approved by the RK CDC. The pilot operation provides for drilling and testing of wells, sampling, core analysis, a complex of hydrodynamic and geophysical studies, taking and study of deep oil samples.

 

Also, thanks to the exploratory operations program, the Company discovered reserves under the existing production licenses in Kyzylkiya and Aryskum. One of the achievements was the discovery of then unexplored oil-bearing sand reservoirs located under a gas cap in Aryskum field. This promulgated a completely new concept of developing oil deposits in this geological area under the Company’s licenses, which will be further developed in 2009 through seismic studies and drilling of exploratory wells. In 2008 the Company re-estimated its reserves in Kumkol, Aryskum and Kyzylkiya fields. Re-estimation reports for Kumkol, Aryskum and Kyzylkiya were approved by the State Reserves Committee. On the basis of the approved reserves the Company proceeded to preparing revised design documentation for development of Kumkol and Kyzylkiya fields.

 

In 2004, in Kolzhan TOO’s licensed territory, based on the results of drilling of 5 exploratory wells, the Company discovered a new large field “North-West Kyzylkiya” with the presence of oil in chock stone deposits of Mississippian period and Upper-Jurassic deposits. This new field is detached from the northern part of Kyzylkiya field, but located near its basic infrastructure. In total, 22 exploratory wells were drilled in the licensed territory. Also, in the course of exploratory operations, the oil-bearing capacity of Paleozoic deposits were determined.

 

According to the results of exploratory operations in North-West Kyzylkiya, the Company estimated the industrial grade reserves and had them approved by the RK State Reserves Committee in 2007. In this respect, the Company held negotiations between Kolzhan TOO and RK MEMR which resulted in granting Kolzhan TOO the right to develop this field. At present, the Company submitted to RK MEMR a draft contract for commercial production of hydrocarbons in North-West Kyzylkiya.

 

In 2008 the Company drilled 3 wells in contract territory 1928 (Karaganda block). Pilot operation and testing of Karabulak-2 well revealed a commercial inflow at 63m3/d.

 

In 2008 PKKR drilled 25 exploratory and appraisal wells. The results were such that the Company not only increased PKKR’s reserves but also set new geological survey tasks.

 

In the 1st quarter of 2009 the Company drilled 4 exploratory and 15 production wells including one well under contract #1928, two wells under license #260-D1, and one well under contract #1057. At present, pilot operation and testing of drilled exploratory wells are ongoing.

 

All in all, in 2009 the Company is planning to drill at least 13 exploratory wells, perform 2D seismic of 550 running kilometers and 3D seismis of 80 running square kilometers.