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Kazakhstan not to pay for repair works at Kashagan oil field

Business Materials 1 October 2014 19:15 (UTC +04:00)

Baku, Azerbaijan, Oct. 1

By Elena Kosolapova - Trend: Kazakhstan will not pay for repair works at Kashagan oil field, Kazinform reported with reference to Deputy Energy Minister Uzakbai Karabalin.

All the expenses for the resumption of oil production at the field will be paid by the project's contractor.

"All the expenses for the resumption of oil production, including the replacement of almost 200 kilometers of pipes from the Kashagan field to the on-shore territory are non-refundable. The contractor should pay for this work with its own money. The Production Sharing Agreement for Kashagan envisages this measure against the culprit in disrupting of commercial production of oil. If the contractor has not ensured commercial production till October 1, the expenses for all further work for the start of commercial oil production are non-refundable. Therefore, all the ongoing work is non-refundable", Karabalin said.

Kashagan's launch which oil reserves amounts to about 38 billion barrels, including 10 billion of recoverable reserves experienced several delays since 2005. Eventually oil production at the field was launched on September 11, 2013, but was suspended two weeks later following detection of two gas leaks in the onshore section of the gas pipeline running from D Island to the onshore processing facility Bolashak.

The project operator North Caspian Operating Co (NCOC) confirmed the need to completely replace the gas and oil pipelines at the field in April.

The total volume of investments in the project is currently equal to $50 billion.

Kashagan field is developed by consortium formed by Kazakh KazMunaiGas, Italian Eni, U.S. ExxonMobil, Anglo-Dutch Royal Dutch Shell, French Total, Japanese Inpex and Chinese CNPC.

A new operator will be formed from the project's shareholders that will replace NCOC and continue working on Kashagan.

Edited by CN

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