Kazakhstan has awarded development and exploration rights for a huge onshore block to a privately-owned Chinese investor in an auction round where only four of nine potential acreages were allocated to bidders.

According to the country’s energy ministry, Kazakhstan Dinghua Energy successfully bid 150 million tenge ($297,000) for exploration and development rights to the Ustyurt 2 block, almost twice what authorities had initially been seeking.

The acreage spans more than 5400 square kilometres in the Mangistau region, one of Kazakhstan’s legacy oil provinces, located in the east of the country and bordering the Caspian Sea.

Ustyurt 2 has been offered in several auction rounds since 2022 but the acreage did not attract sufficient interest due to its remote location and prior complexities encountered in identifying commercial hydrocarbon reserves at other blocks in the hydrocarbon bearing region which also extends into neighbouring Uzbekistan.

According to Kazakhstan's company register, Kazakhstan Dinghua Energy was incorporated in August 2024 in the capital of Astana with a stated business purpose of oil and associated gas production and with a sole individual shareholder.

While Kazakhstan Dinghua Energy will pay the equivalent of $297,000 for rights to the block, the company will have to invest at least $15 million in the first exploration phase to comply with the terms of the award, according to the energy ministry.

The initial phase calls for the collection of about 1500 kilometres of 2D seismic data at an estimated cost of $6 million, and the drilling of three exploration wells for a total of $9 million, according to the ministry.

Meanwhile, the largest winning bid from the latest auction round was an 809 million tenge submission from Kazakh domestic company Almaty Oil Ventures, which secured the Zharkent block.

Zharkent covers more than 2500 square kilometres in the Zhetysu and Almata regions, located in the vicinity of a major gas pipeline which runs from Turkmenistan to China via Kazakhstan.

According to Kazakh oil and gas industry advisory group, Energy Monitor, Almaty Oil Ventures is controlled by a group of Kazakh oil investors.

The energy ministry said that the winner of the Zharkent block will have to be ready to invest $12 million to collect 2D seismic data and spudding two wildcats on the acreage.

Two other blocks — Kokoy and Sarysu — were secured by Taraz Petroleum and Earth Oil & Gas, also incorporated in Kazakhstan, according to the energy ministry.

Kokoy occupies about 1300 square kilometres in the Zhambyl region while Sarysu spans about 2000 square kilometres in the Kyzylorda and Turkestan regions.

Both are Kazakh-registered companies that are also owned by local businessmen, according to Energy Monitor.

For the remaining five blocks, the energy ministry received preliminary indications of interest but potential bidders did not attend the online bidding round.

Prior to the auction's opening on 28 May, the ministry had removed a further two blocks from bidding after they failed to attract any preliminary interest.