Kazakhstan and China have agreed on sales of a stake in the giant Kashagan oilfield development project to China’s CNPC.
“The two sides have agreed on China’s participation in the giant Kashagan oilfield. The agreement is welcomed and supported by the two governments”, China’s President Xi Jinping said at a press-conference in Astana following his talks with Kazakhstan’s President Nursultan Nazarbayev September 7.
At the first sitting of the Kazakh-Chinese Business Council, KazMunaiGas National Oil Company and CNPC signed a respective agreement.
Earlier the Kazakh Oil Ministry had sent a notification to the exiting ConocoPhilips that the Government would exercise its preemptive right to buy out the company’s 8.4% in the project.
Both India and China had been seeking to purchase the stake. India’s ONGC Videsh Limited was going to buy the stake for $5.5 billion. China’s CNPC was ready to pay $5 billion for the stake, purchasing it from KazMunaiGas.
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%).
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.
ConocoPhillips will sell its 8.4-percent stake in Kashagan to KazMunaiGas for $5 billion, Tengrinews.kz reported July 3, citing the company’s official website.