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Kazakhstan: Production at Supergiant Oil Field Delayed Until 2014

The launch of commercial production at Kashagan, Kazakhstan’s supergiant Caspian Sea oilfield, has been delayed again and will not begin until 2014.

Christophe de Margerie, chief executive of France's Total, one of the consortium partners, made the unwelcome announcement that the storied project would miss its latest target of starting commercial production in 2013. He said Kashagan “will not restart before the end of the year” following the suspension of production in October to deal with a gas leak. “It's more than simply repairing pipes,” Reuters quoted him as saying this week. 

The North Caspian Operating Company (NCOC) – which also includes Kazakhstan’s state energy firm KazMunayGaz; oil majors ExxonMobil, Shell, and Eni; China’s CNPC; and Japan’s INPEX – has not confirmed that production will not re-start this year, but Hans Wenck, NCOC’s external communications manager, told EurasiaNet.org that “inspections and investigations will take some weeks to conclude.”

“The Kashagan oil and gas production remains shut in until the inspections are completed and results of the expert studies are available, and restart of the facilities can be carried out safely,” he said in an emailed statement on November 12. “Until such investigations are completed it will be too early to discuss any possible remedial actions and time required to implement them.”

Reuters quoted an unidentified industry source on November 11 as saying that Kashagan exports would restart in March “in a best-case scenario.” 

Kashagan started pilot production on September 11, but on September 24 a gas leak halted output. Production resumed on October 6, but was suspended on October 9 after another leak was detected.

When discovered in 2000, Kashagan was the world’s most spectacular oil strike since 1969. The project has been dogged by ballooning costs and slipping production schedules due to immense logistical challenges. 

An initial deadline to start commercial production in 2005 has been postponed several times, angering the government in Astana, which wants the oil to start flowing and fueling economic growth.

In a separate development, KazMunayGaz and oil-pipeline operator KazTransOil signed a preliminary agreement with Russia’s Rosneft for Russian oil to transit Kazakhstan to China, Reuters reported on November 11. Details were sparse, but Reuters quoted unidentified sources as saying that Rosneft would supply 7 million metric tons annually to China through Kazakhstan. Transiting oil across Kazakhstan is essential for Moscow to meet its energy commitments to Beijing. 

Kazakhstan: Production at Supergiant Oil Field Delayed Until 2014

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