Kazakh officials: Date set for Kashagan relaunch

14 September 2016, Week 36, Issue 898

Kashagan, Kazakhstan’s largest oilfield, is set to resume production this autumn after a hiatus of three years, officials in Astana stated last week. They also indicated, however, that commercial development operations were not likely to begin in October, as previously anticipated.

Speaking during a cabinet meeting on September 9, Sauat Mynbayev, the head of state-owned KazMunaiGaz (KMG), said that oil would begin flowing again on September 24. Yields will then rise to a commercial level of 75,000 barrels per day by early to mid-November, he said.

Acting Kazakh Minister of Energy Kanat Bozumbayev was somewhat more cautious. After the cabinet meeting, he told reporters that the official date for bringing Kashagan back on stream was October 23. The field will then begin regular commercial development soon afterwards, with output rates reaching 75,000 bpd by the end of November, he said. This is in line with an accord signed between Kazakhstan’s government and the international consortium that is developing the offshore site, he said.

If the launch goes forward as planned in October, Kashagan will yield around 500,000 tonnes (3.7 million barrels) of crude oil before the end of 2016, the Kazakh Ministry of Energy informed Reuters later on September 9. It did not say how high yields might rise by late December.

Bozumbayev said earlier this year that the field was likely to produce somewhere between 50,000 tonnes (365,000 barrels) and 1 million tonnes (7.3 million barrels) of oil in 2016. Output will then climb to 3-5 million tonnes (60,000-100,000 bpd) in 2017 and 7 million tonnes (140,000 bpd) in 2018, he added.

During its first phase of development, Kashagan will see output peak at 20 million tonnes (146.6 million barrels) per year, or around 400,000 bpd. If shareholders approve additional investment, yields could eventually reach 50 million tonnes (366.5 million barrels) per year – equivalent to 1 million bpd.

Kashagan, which lies in the north Caspian Sea, is Kazakhstan’s largest crude oil deposit. It contains 9-13 billion barrels of oil in recoverable reserves, along with over 1 tcm of gas. Most of the crude produced from the field will be exported via overland pipeline, while most of the gas will be sold to local buyers for domestic consumption.

The consortium that is developing Kashagan includes KMG, Kazakhstan’s NOC, as well as Eni, ExxonMobil, Royal Dutch Shell, Total, Inpex and China National Petroleum Corp. (CNPC). The group was originally slated to being the field on line in 2005 but postponed first oil several times because of technical difficulties. It finally began production in September 2013 but had to suspend operations just a few weeks later, owing to the discovery of gas leaks in offshore pipeline networks.

Since then, the consortium has had the pipelines rebuilt to withstand sulphide stress corrosion stemming from the sour crude contained in Kashagan’s reservoir. The oil must be treated prior to being exported.

 

Joseph Murphy

Edited by

Joseph Murphy

Editor

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