Nostrum Oil & Gas PLC announces that through its subsidiary Zhaikmunai LLP it has entered into binding agreements to process third party hydrocarbons delivered by Ural Oil & Gas LLP (“UOG”).

UOG is a company that is owned by KazMunaiGas (“KMG”) (50%), Sinopec (27.5%) and MOL Group (“MOL”) (22.5%). According to the 2017 KMG Annual Report, the Rozhkovskoye field has 196 million boe 2P reserves booked. Research produced by Wood Mackenzie states that the company has already drilled and completed eight wells in the Rozhkovskoye field. The Rozhkovskoye field is within 20km of Nostrum’s Chinarevskoye field.

Once UOG has obtained all necessary internal approvals they will fund the infrastructure required to deliver the hydrocarbons to the boundary of the Chinarevskoye field. The high level commercial terms comprise of two parts. Firstly, a tolling fee for the stabilisation of liquid condensate which will be US$8 per barrel and secondly the purchasing of raw gas from UOG at a price to be agreed at the point of delivery.

Kai-Uwe Kessel, Chief Executive Officer of Nostrum Oil & Gas, commented:
“This agreement marks a significant step for Nostrum in demonstrating the value of its infrastructure. Whilst the Company’s focus remains stabilising and ramping up production from the Chinarevskoye field, this agreement provides the potential for a secure revenue stream in the next three to five years. Nostrum’s ability to fully monetise the hydrocarbons in the Chinarevskoye field is not restricted as we will have 4.2bcm of annual processing capacity available through GTU 1, 2 and 3. It further reinforces the potential of Nostrum’s infrastructure and its ability to carry out value accretive deals in the region. This is the second such deal that illustrates the value of the gas treatment facility following the acquisition of the Trident licences in 2013 for US$16 million, which now have 121 million boe 2P reserves booked in them. We see an ability to further grow our access to resources in the region as a result of the investments we have made in our infrastructure.”