Kazakhstan still planning to resume production at Kashagan late 2016

Kazakhstan still plans to resume commercial production of oil at the suspended giant Kashagan oilfield in the Caspian offshore at the end of 2016, the country's First Vice Minister of Energy Uzakbai karabalin told a briefing today.

“There have been no changes in the plans (…) as of today the main task is to replace the pipelines running from the artificial island to the treatment facilities based on the shore of the Caspian Sea. A total of 99 km of pipes have been produced in Germany and Japan, with 67.5 km of them already delivered to Kazakhstan. 26 km of pipes have already been laid. The work is in full swing", he said.

Kazakhstan's Government will not be compensating the international consortium of companies developing the giant Kashagan oilfield for expenses related to replacement of faulty pipes, the country's Prime Minister Karim Massimov announced mid-June 2015.

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.

“At Kashagan both the oil and gas pipes have to be fully changed. 200 km of pipes have to be purchased to replace the damaged pipes. When it comes to scenarios of laying the pipes, there are two possible options. If the optimistic scenario works out, the oil production will be resumed in the first half of 2016; should we apply the second scenario, the expected time of resumption is the second half of 2016. The estimates may be adjusted (…), the country's then Oil and Gas Minister Uzakbai Karabalin told a briefing July 30, 2014.

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&rsquos operator, the oilfield&rsquos 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 then Oil and Gas Minister Uzakbai Karabalin as saying at a press-conference following the sitting of KAZENERGY petroleum association.

“When it comes to economic viability of the Kashagan project, it is a complicated project calling for susbtantial investments. To the best of my knowlege, it can be economically viable with oil prices standing at $100 per barrel. In the long term the figures are acceptable for the subcontractors (...) the formal contract life is up to 2041; however, the actual production could be extended for another 50 years", Tengrinews.kz reported early February this year, citing Sauat Mynbayev, KazMunaiGas Chairman of the Board.

Source: tengrinews