Talks to be held to boost oil production at other oilfields over failed plans to produce 2.5 million tons at Kashagan

Given the risks of further postponement of commercial production at the giant Kashagan oilfield, talks will be held with other oil companies to boost crude production figures, Tengrinews.kz reports, citing the country’s Minister of Economic Affairs Yerbolat Dossayev as saying today.

“In 2014 there is still a lingering risk of another postponement at the giant Kashagan oilfield; thus, the production figure at the oilfield may fail to reach 2.4 million tons. Therefore, talks will be held with other oil producers to boost crude production and exports by at least 1.5 million tons at other oilfields”, the Minister said.

“The final part of the investigation into the malfunctioned gas pipelines at the giant Kashagan oilfield will take place in April”, Newskaz.ru reported April 7, citing the country’s Oil Minister Uzakbai Karabalin as saying before the Majilis (lower chamber).

“The stage of actual production had been repeatedly delayed; the production only started last autumn; there are still some unresolved issues related to the pipelines. Over 2000 weld seams have been inspected; we have covered over 6000 meters of pipes with in-line inspections; the data is being processed at laboratories”, he said.

Sauat Mynbayev, KazMunaiGas National Oil Company Head, believes production will be resumed at the giant Kashagan oilfield in the second half of the year, Tengrinews.kz reported March 4, 2014.

“I am not sure if the failed gas pipeline will be fully replaced with a new one; the findings of the investigation will only be available by the end of March. It’s too early to talk of any specific figures, estimated expenses related to repairs of the pipe (…) Production is likely to be resumed in the H2 2014, but we should be cautious when it comes to probability estimates(…) I wouldn’t voice any comments”, Mr. Mynbayev said.

He emphasized that production estimates would be only clear after the findings are announced.

Commercial production at Kashagan started September 11, 2013. However, it was suspended 2 weeks later due to a gas leakage. The production process was resumed shortly. However, another leakage was detected in October.

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.

“We expect Kashagan to come on stream shortly. The volume of crude to be produced hinges on the period of repairs currently under way. Our estimates stand at about 2 million tons for 2014”, Tengrinews.kz reported mid-January 2014, quoting the country’s Oil and Gas Minister Uzakbai Karabalin as saying at a press-conference following the sitting of KAZENERGY petroleum association.