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Commercial production at Kashagan to start between December 2012 and June 2013

23 may 2012, 23:51
0
Kashagan oil field. ©REUTERS
Kashagan oil field. ©REUTERS
Kazakhstan and NCOC companies have signed an agreement to start commercial production at the giant Kashagan oilfield in the period from December 2012 to June 2013, Newskaz.ru reports, citing the Kazakh Oil and Gas Ministry’s Press Service.

The Kashagan field, named after a 19th century Kazakh poet from Mangistau, is located in the Kazakhstan sector of the Caspian Sea and extends over a surface area of approximately 75 kilometers by 45 kilometers. The reservoir lies some 4,200 meters below the shallow waters of the northern part of the Caspian Sea and is highly pressured (770 bar of initial pressure). The crude oil that it contains has high ‘sour gas’ content.

The development of Kashagan, in the harsh offshore environment of the northern part of the Caspian Sea, represents a unique combination of technical and supply chain complexity. The combined safety, engineering, logistical and environmental challenges make it one of the largest and most complex industrial projects currently being developed anywhere in the world.

According to Kazakhstan geologists, geological reserves of Kashagan are estimated at 4.8 billion tons of oil. According to the project’s operator, the oilfield’s reserves are estimated at 38 billion barrels, with 10 billion barrels being recoverable. Besides, natural gas reserves are estimated at over 1 trillion cubic meters. The consortium developing the field comprises Eni, Shell, ExxonMobil, Total and KazMunaiGaz (all with a 16.81% stake) as well as ConocoPhillips (8.4%) and Japan's Inpex (7.56%).

“In line with reached agreements, the sides approve of amendments into the plan and budget of the oilfield development, enabling to start commercial production between December 2012 and June 2013” the statement reads.

In particular, the sides have agreed to finance KazMunaiGas’ share of investments in 2012-2013 out of the consortium’s funds; to sign an agreement between KazTransGas and the participating companies on sales of Kashagan gas to make sure 83% of the gas is supplied to the internal market before 2041.

Besides, the government and the companies have reached “maximum clarity with regards to taxation and reimbursement issues”.

According to KMG, the Company plans to invest $8 billion into the project before 2014, with the total of investments into a range of projects standing at $20 billion.

Earlier Tengrinews.kz reported that KazMunaiGas National Oil and Gas Company would obtain a loan of $4 billion out of the National Oil Fund to finance the Kashagan oilfield development project.

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