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Kashagan oilfield might face another 3-year delay

06 april 2011, 12:14
Artificial island in the Caspian sea, West Kashagan. REUTERS/Shamil Zhumatov©
Artificial island in the Caspian sea, West Kashagan. REUTERS/Shamil Zhumatov©
The Kazakh government may halt work to expand the oilfield for three years, KazTAG reports citing the Daily Telegraph.

“Kazakhstan is planning a three-year halt to work on the main phase of the super-giant Kashagan oil field development, as international oil companies Royal Dutch Shell and Exxon Mobil fight to convince the country's oil ministry to back a simplified design, which would slash costs by $18 billion to $50 billion,” published the newspaper on Monday.

If the simplified design is approved, Shell may push the start of full production back into the next decade. This will effect the company's profit because its contract expires in 2037.

Since Kazakhstan is considering halting the field development it will keep the production at the current level of 375 thousand barrels.

The North Caspian Operating Company (NCOC) consortium is planning to eventually bring the Kashagan oil production to the full capacity of 1.5 million barrels a day.

Oil and gas ministry was unhappy with NCOC decision to use a new geological model of the field development that was submitted by Exxon last month.

The new design was unofficially presented to Kazakhstan government at the end of last year. The concept of the second phase is expected to be reviewed by the consortium in the end of 2011.

Earlier the deadline for the second phase of Kashagan field development was pushed back to 2018-2019 over escalating development costs and technological complications.

Start of the initial production was postponed several times. End of 2012 was the latest deadline set.

The Kashagan foreign partners include Eni SpA, Exxon Mobil Corp., Total SA, ConocoPhillips and Royal Dutch Shell Plc.

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