NCOC poised to start commercial production at Kashagan in October

The operator of Kashagan oilfield in Kazakhstan, NCOC consortium, is interested in starting the commercial production in October 2013, the analyst of the Agency for Research of Investments Profitability Kamilla Manakova told Tengrinews.kz. First oil was produced at the oilfield in the North Caspian Sea today, September 11, although initially the launch was scheduled for September 9. According to KazMunaiGas Chairman Sauat Mynbayev, it may take up to three weeks to launch of the commercial production and it is possible that the commercial production will start even before October 1. According to Manakova, the statement made by Sauat Mynbayev about the impending start of the commercial oil production at Kashagan certifies that the level of technological preparedness of the project’s participants is very high and that the equipment tests have been largely completed. “As you know, the deadline for the commercial production start at the North-Caspian project was set to October 1, 2013 and the expenses of the foreign companies developing the giant oilfield will not be reimbursed in case of yet another delay. They will have three weeks sharp from the planned pilot production date (September 9) to the beginning of October. This makes NCOC very interested in starting commercial production in October,” the analyst said. Meanwhile, the start of the commercial production depends on results of the start-up works during the pilot production, she continued. “Should the results of the pilot production be of unsatisfactory security level because of the high formation pressure and high content of hydrogen sulphide, the deadlines may be moved to spring 2014,” Manakova said. However, according to the senior fellow of the Economy Institute of Kazakhstan Ministry of Education and Science Oleg Yegorov, the field will not be ready for exploitation in October 2013. He believes that commercial oil production will start in December 2013 at best. “They will probably produce several tons in September, but they will not send them anywhere and will jut store them in tanks,” he said. Besides, Yegorov said, several pipelines at the site already need repairs, as some time has passed since technical works were last performed. "272 violations were discovered there some time ago. And if they start operating in October, all that may be disastrous for the Caspian region,” he noted. On September 7, 2013 Kazakhstan and China agreed on sales of a stake in the giant Kashagan oilfield development project to China’s CNPC. Earlier the Kazakhstan Oil Ministry had sent a notification informing the outgoing ConocoPhilips that the Government would exercise its preemptive right and buy out the company’s 8.4% stake in the project. According to Yegorov, in this relation, the start of the commercial oil production requires approval of all the members of the Consortium. A leading expert of Finam Management Dmitry Baranov said that most of the preparatory work was completed and the commercial production could start in the nearest time. “But it is quite possible that something might come up and hinder it. That’s why Mr.Mynbayev announced this commercial production deadline (October 1) to give the consortium enough time to fix everything if somethings comes up,” the speaker said. The commercial production at Kashagan was postponed several times and initially the first oil was supposed to be produced in March 2013. Earlier KMG head said that Kashagan field would produce 1.5 to 3 million tons (11 to 22 million barrels) in 2013. The production volume at Stage-1 is expected to reach 370 thousand barrels (50 thousand tons) of oil per day with a possible increase to 450 thousand barrels (61 thousand tons) of oil per day, which is 132-161 million barrels (18-22 million tons) of oil per year. The Stage-2 (in 2018-2019) target is to bring the production to 375 thousand barrels (51 thousand tons) of oil per day and to around 134 million barrels (18.3 million tons) of oil over the following three years. Earlier deputy chairman of KazMunaiGas Kurmangazy Iskaziyev said that Kashagan field would start generating profit in 2112. By Azhar Ashirova