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Date of completion of new pipelines construction on Kazakh Kashagan announced

Business Materials 9 February 2015 15:48 (UTC +04:00)
Construction of new pipelines on the Kashagan field in Kazakhstan should be completed in the second half of 2016
Date of completion of new pipelines construction on Kazakh Kashagan announced

Astana, Kazakhstan, Feb.9

By Daniyar Mukhtarov - Trend:

Construction of new pipelines on the Kashagan field in Kazakhstan should be completed in the second half of 2016, the head of the national company KazMunaiGas (KMG) NC Sauat Mynbayev told reporters Feb.9.

"Construction of new pipelines on Kashagan should be completed in the second half of 2016," he said.

The head of the national company went on to add that the shareholders of the consortium, not the state will pay the costs of construction of the new pipes.

"The republic will not pay the costs of piping - it will be done by the shareholders of the consortium," said Mynbayev. "Consequently, they will be interested in a speedy and qualitative implementation of pipelines construction work."

He said that all the mistakes that caused the leak were taken into account during the laying of the pipes.

Answering the question of reducing the profitability of oil production on the Kashagan amid falling oil prices, the head of the national company said that the project is a long-term one, so the payback period can be long.

"Indeed, Kashagan is not a simple project, it is a capital-intensive one, so the limit of payback is high," he said. "It may be $100 per barrel as well. But this is acceptable in the long term for large multinational companies. Formally, the term of the contract for the consortium ends in 2041. But for republic itself, the oil production on Kashagan will be carried out after 2041 for another 50 years."

Kashagan is a large oil and gas field in Kazakhstan, located in the north of the Caspian Sea. The geological reserves of Kashagan are estimated at 4.8 billion metric tons of oil. The total oil reserves amount to 38 billion barrels with some 10 billion of them recoverable reserves. There are large natural gas reserves at the Kashagan field - over one trillion cubic meters.

The production at the Kashagan field started Sept. 2013, but in October, it was ceased after a gas leak in one of the main pipelines. The analysis revealed numerous cracks in the pipeline, which needed to be completely replaced. The replacement was said to take at least two years.

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