Plans are there to produce 1.5-3 million tons of oil at Kashagan this year

Plans are there to produce from 1.5 to 3 million tons of oil at the giant Kashagan oilfield in 2013, Newskaz.ru reports, citing KazMunaiGas National Oil Company’s Chairman of the Board Lyazzat Kiinov as saying April 29. “There is all the needed infrastructure in place to supply the crude to global markets”, he said. According to him, KazMunaiGas us getting ready to handle greater volumes of crude in future. “We are expanding the Caspian Pipeline Consortium’s network of pipelines. Its carrying capacity as of today stands at 30-32 million tons. When the expansion works are over, we will be able to ship 67 million tons, with Kazakhstan being responsible for most of the crude”, he said. “There is a probability that part of the Kashagan’s oil will be shipped via the Aktau-Baku-Batumi pipeline (…) such an option is also interesting for us as Rompetrol, part of KazMunaiGas, processes oil in the heart of Europe. We are also considering supplying light crude from Kashagan, Karachaganak and Tengiz oilfields to China. The market of China is of great interest (…), Mr. Kiinov said. “To this end, we are expanding the Atasu-Alashankow pipeline towards China. The system is capable of shipping 12 million tons as of today; we have planned to bring the figure up to 20 million tons”, he said. Earlier Tengrinews.kz reported, citing the country’s Minister of Economic Affairs and Budget Planning Erbolat Dossayev, that the start of commercial production at Kashagan might be further delayed. In an interview for journalists he elaborated that “production at Kashagan would be postponed from June to early September”. “This postponement would have no effect on budget revenues (…) the postponement is due to testing of the equipment”, he added. 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%). Tengrinews.kz reported late May 2012 that Kazakhstan and NCOC companies had signed an agreement to start commercial production at the giant Kashagan oilfield in the period from December 2012 to June 2013. NCOC, a consortium developing the giant Kashagan oilfield, plans to produce 75 000 barrels of oil per day at the initial production stage, Tengrinews.kz reported mid-May 2012, citing NCOC Vice Managing Director Zhakyp Marabayev as saying on the sidelines of a CIS summit on oil and gas. According to him, plans are there to bring the production figure up to 350 000 barrels a day or even up to 450 000 barrels a day at the first stage of the oilfield development. “The current facilities enable to produce up to 350 000 barrels a day (…) Should the gas injection capacities be expanded, we could produce up to 450 000 barrels a day”, he said at that time. Early October 2012 Tengrinews.kz reported, citing Kazakhstan’s Oil and Gas Minister Sauat Mynbayev as saying October 2 on the sidelines of the KazEnergy Oil Conference held in Astana, that ConocoPhillips might exit the project. According to the СonocoPhillips’s press-release as of late November 2012, the deal to sell the stake to India’s ONGC Videsh Limited was expected to be finalized in the H1 2013. ConocoPhillips’s proceedings from the sale are expected to reach $5 billion. The deal is to be approved of by the Kazakhstan’s Government. Kazakhstan is to take a decision on whether to exercise its preemptive right to purchase the СonocoPhillips’s stake in the consortium developing the giant Kashagan oilfield before May 25, 2015.