Kazakhstan still expects first oil at Kashagan before the end of 2012

Kazakhstan still expects to get the first oil from the giant Kashagan oil field before the end of 2012, Newskaz.ru reports, citing Samruk Kazyna National Welfare Fund head Umirzak Shukeev as saying. “We are standing on our stance that we need to get the first oil this year. Constructive talks are under way. Almost all the financial issues have been resolved”, Mr. Shukeev told at a press conference April 5. 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 metres. 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%). During the talks May 18 with Kazakhstan’s President Nursultan Nazarbayev, Paolo Scaroni, Eni Chief Executive Officer and General Manager, promised that “the first oil is expected in December 2012 or two-three months later than that”. 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. “The decision has been taken to support the Kashagan project. The loan will be provided in two tranches in 2013 and 2015”, the President’s Press Service announced following a sitting on the National Oil Fund presided over by President Nazarbayev. In his State of the Nation Address January 27, 2012, President Nazarbayev suggested the National Oil Fund money be used in the form of loans to the national economy rather than kept with foreign banks. The National Fund of Kazakhstan was created in 2000 as a stabilization fund that accumulates windfall revenues from oil sales and ensures the economy of Kazakhstan will be stable against the price swings of oil. The assets of the National Fund assets are monitored by the National Bank of the Republic of Kazakhstan. As of February 1, 2012, assets of the National Oil Fund made up $45.5 billion.