Baku, Azerbaijan, Dec.9
By Elena Kosolapova - Trend:
There are several reasons why the Kashagan oil and gas field development project in the Kazakh sector of the Caspian Sea may be unprofitable, Kazakh ecologist and member of the advisory board of the Caspian Sea Rescue Fund, Serikjan Mambetalin said today.
"From an economic point of view, such a situation may occur when the project becomes unprofitable at the slightest oil price reduction. For example up to $80 dollars," he told Trend by phone on Monday.
The expert recalled that Kashagan oil contains a very high percentage of sulphur, up to 18 per cent. This means there will be a need to ensure its utilization in huge volumes.
"Sulphur is very aggressive," he said. "At present, there is no technology or materials that could withstand this aggressive sphere."
He recalled the pipes are periodically changed at the nearby onshore Tengiz field, as oil has similar characteristics with the Kashagan one.
"However there is another feature at the Kashagan field that the pipes are laid on the seabed," the expert added.
Oil production at Kashagan started on September 11, 2013, but on September 24 its operation was suspended after a gas leak appeared from the ground pipeline stretching from the Island D to the Bolashak plant.
Production was resumed, but again suspended on October 9 after showing another leak.
The cause of leaks in the gas pipeline was its cracking under the influence of sulphide compounds, the NCOC consortium said earlier.
"The Caspian Sea Rescue Fund thinks that Kashagan will face the same such technical problems and periodically there will be stops to change the pipes," Mambetalin added.
The expert recalled that hundreds of kilometres of pipes were laid from the field to the oil refinery. The pipes are exposed to corrosion and erosion until the oil reaches this plant.
That is why regular changes of pipes will have a major impact on project economics.
"As a result of the upcoming repair, the NCOC consortium will hardly go beyond the budget because it is huge," he said.
"The project's budget is overstated. The claimed $130 billion allegedly spent on this project doesn't correspond to reality. Drilling of wells, creation of artificial islands and a refinery are not worth windfall money," the expert said.
The final results of the analyses of the pipes being conducted at Oxford University in the UK are expected to be available soon, according to the ecologist. These analyses must show how long pipes can function in the case of pumping aggressive oil from Kashagan.
"If it turns out that the pipes are so deteriorated that they began to crack in about 10 days after commencement of production, it is not known whether they will be able to continue production. They will not be able to change pipes every 10 days," the ecologist said.
Additionally, oil production at Kashagan poses a great threat to the economy and to the biodiversity of the Caspian Sea, according to the ecologist.
"There will be the danger of the leak of aggressive oil, mercaptan and hydrogen sulphide throughout the whole period of Kashagan's functioning. This is a very big problem for all Caspian Sea countries. It there is an accident in the Kazakh sector, this will also impact on Azerbaijan, Turkmenistan, Iran and other countries," Mambetalin said.
The expert believes that in order to avoid an environmental catastrophe, it is necessary to preserve the field and wait for the emergence of normal conditions for production, new technology and materials that will withstand the harsh and corrosive environments.
Kashagan is a large oil and gas field in Kazakhstan located in the north of the Caspian Sea. Its geological reserves are estimated at 4.8 billion tons of oil. The total oil reserves amount to 38 billion barrels, some 10 billion of which are recoverable reserves.
There are large natural gas reserves at the Kashagan field of over one trillion cubic meters
This oil and gas reservoir is unique for its huge reservoir pressure, large depth and high content of hydrogen sulphide.
The launch of oil production at Kashagan has been postponed several times. The consortium of foreign companies led by Eni initially planned to provide commercial production in 2008.
Translated by N.H, L.Z.
Edited by S.M.