Russ Oil-Gas

MOSCOW, June 1 (RIA Novosti) - Russia's Gazprom and Kazakhstan's KazMunaiGaz signed a series of agreements Friday to set up a joint venture to process Kazakh natural gas, the Central Asian state's prime minister said. The former Soviet allies will create a joint venture in Russia's Urals city of Orenburg to process gas from nearby fields in Kazakhstan. Its maximum capacity is expected to reach 30.6 billion cubic meters a year in 2012. Kazakhstan is expected to supply about 16 billion cubic meters a year. Speaking to the Russian president, Karim Masimov said that "all issues and formalities were settled last night and this morning." The 15-year joint venture deal and agreements regulating supplies, prices, and other terms was signed by Karachagansk Petroleum Operating B.V., which runs the gas fields, and KazRosGaz, a venture established by the Russian energy giant and KazMunaiGaz in 2002. Output will be largely supplied back to Kazakhstan and a minor part exported. Gazprom [RTS: GAZP] earlier said the deal with KazMunaiGaz would allow the Orenburg plant to increase output. Production at the Orenburg gas deposit, the main source for the plant, has been falling since 1997. President Vladimir Putin welcomed the agreements: "That is good news... I know our Kazakh colleagues are satisfied with the prices and terms [of the agreements]." Kazakhstan's energy and mineral resources minister said earlier Kazakh gas would be supplied to Russia "at less than $145 per 1,000 cubic meters." Russia's average gas price for Western Europe is $250.