Kazakhstan to profit from Kashagan at any oil prices

Kazakhstan to profit from Kashagan at any oil prices

Baku, Azerbaijan, Oct. 6
By Elena Kosolapova - Trend:
Kazakhstan will get profit from Kashagan oil field at any oil prices, Kazakh Energy Vice-Minister Magzum Mirzagaliev said at the KIOGE oil and gas exhibition in Astana, official website of Kazakh Energy Ministry reported citing article from the LSM.kz business news website.

“We will receive royalties and taxes at any oil price", Mirzagaliev said.

He also noted that commercial production at Kashagan will start in the third decade of October and the field is under testing now.
Mirzagaliev added that in line with existing agreements, Kazakhstan will not reimburse the costs of the repair works held at the field in 2014 -2016. These costs were funded by the project shareholders on their own.

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 tons of oil. The total oil reserves amount to 38 billion barrels; some 10 billion out of them are recoverable reserves. There are large natural gas reserves at the Kashagan field - over one trillion cubic meters.

In the ranking compiled by CNN Money in 2012, Kashagan was assessed at $116 billion and recognized as the most expensive energy project in the world. Moreover, the cost of the project considerably grew up in price since that time. Many experts believe that the prime cost of Kashagan oil exceeds current oil price.

The production at the Kashagan field started in September 2013, but in October, it was suspended after a gas leak in one of the main pipelines. The analysis has been conducted for several months.

As a result, numerous micro-cracks were revealed in the pipeline. They emerged as a result of the effect of the associated gas with high sulfur content on the metal. The project operator confirmed the need for complete replacement of the gas pipeline and oil pipeline on the field. Their total length is about 200 kilometers.

North Caspian Operating Company BV (NCOC) is operating the project. The project participants are KMG Kashagan B.V (16.88 percent), AGIP Caspian Sea BV (nearly 16.81 percent), CNPC Kazakhstan BV (8.33 percent), Exxon Mobil Kazakhstan Inc. (nearly 16.81 percent), INPEX North Caspian Sea Ltd., Shell Kazakhstan Development BV (nearly 16.81 percent), Total E&P Kazakhstan (nearly 16.81 percent).

Follow the author on Twitter: @E_Kosolapova

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