First oil from Kashagan expected at year end

Oil&Gas Materials 3 May 2012 15:46 (UTC +04:00)

Kazakhstan, Astana, May 3 /Trend D.Mukhtarov/

The first oil from the Kashagan field is expected later this year, chairman of the board of JSC NC 'KazMunaiGas' Lyazzat Kiinov told Trend on Thursday.

"The beginning of the development of Kashagan and extraction of the 'first oil' is expected as planned in late 2012. We have no doubts at this point," Kiinov said. He added it would be "the beginning of the trial".

"Then a stop is possible due to testing and inspection of equipment, but it does not take much time. So no doubt receipt of the 'first oil' will be in accordance with the schedule which is late 2012 - early 2013," Kiinov said.

According to Kiinov it is too early to speak about the second stage.

Dates of the commencement of oil production at Kashagan have been delayed several times. A consortium of foreign companies led by Italy's Eni initially promised to provide commercial production in 2008.

Minister of Oil and Gas of Kazakhstan Sauat Mynbayev expressed hope for a speedy resolution of problems with the budget of the experimental, industrial phase of the development of the Kashagan field last week.

"We are in negotiations to amend the plans and the budget of the experimental, industrial phase, although we are already close to a solution. I hope it will end soon," Mynbayev said earlier.

However, he noted that the synchronisation of the concept of the second phase of the Kashagan field development has not started yet, because "the second phase of the concept wasn't submitted. It is not in the ministry".

The Kashagan field is located in the north of the Caspian Sea. Geological reserves are estimated at 4.8 billion tons of oil according to Kazakh geologists. According to the project operator, the total oil reserves are 38 billion barrels, or six billion tons, of which recoverable is about 10 billion barrels. Kashagan has major natural gas reserves reaching more than one trillion cubic meters.

During endorsing the transfer dates of commercial production, Kazakhstan increased its stake in the project from eight per cent to 16.8 per cent and achieved payment of royalties which was absent in the original agreement. In late June 2008 another memorandum was signed according to which the period of commercial oil production at Kashagan in the Caspian Sea was transferred to 2013.