Exclusive interview of Uzakbay Karabalin, the President of KazMunayGas National Company of Kazakhstan with Trend Correspondent in Astana
Question: At what stage is the development of a Transport Agreement between Kazakhstan and Azerbaijan, which will be required for the activities of Aktau-Baku energy corridor on the delivery of export oil via the territory of Azerbaijan?
Answer: An agreement between Kazakhstan and Azerbaijan on support and assistance to the oil transportation from Kazakhstan via the Caspian Sea and Azerbaijan to the international markets through the Baku-Tbilisi-Ceyhan (BTC) pipeline was signed on 16 June 2006. In accordance with the terms of the agreement, the next step in the implementation of the Trans-Caspian project is the conclusion of the agreement between investors and host-Governments, as well as agreements with the sponsor group on Trans-Caspian project for achievement of approval and authorization from the Government of Kazakhstan and Azerbaijan for the implementation of the project. The documents are in the stage of discussion by the interested sides.
Question: Participants of the North-Caspian project plans to set up oil production in Kashagan in 2009. What are reasons for such long delay in the implementation of the project and do you allow additional delay in the commencement of the production in this big field?
Answer: First of all it is necessary to note that in accordance with the business schedule and budget of the Kashagan field development, dated 21 February 2004, it is planed to commence the oil production from the field in mid-2008. So far, no amendment was made to the document with respect to postponing the oil production, which testifies the maintenance of the official status-quo with respect to the terms of production on Kashagan.
Moreover, at the beginning of 2006 an operator of the North-Caspian Project, Agip, informed KazMunayGas about the results of additional measures, which revealed a problem with the production and ecological safety of the offshore field rigs, which are currently being established on Kashagan offshore fields.
Kashagan field is very much similar to Tengiz for the composition of plastic fluids. So, it differs for content of highly toxic gas, including sulphuretted hydroge and carbonic gas, leakage of which could greatly damage the environment, health and life of personnel, working in the field. Agip said that the new data obtained in the course of well drilling and testing work in the field testify that the existing scheme of improvement of offshore field, envisaging the placement of major technological rigs in one island, might cause high toxic danger for the personnel of the complex and environment. However it is inadmissible. Coming out from this aspect Agip is currently considering the options for changing the project of the offshore complex in order to decrease the ecological risk.
Further implementation of any variant requires additional time for the fabrication of offshore facilities by the commencement of the production, because it will require the establishment of additional infrastructure вЂ" expansion of existing islands, construction of new, modified technological equipment, etc.
These circumstances might become a ground for possible delay in the commencement of commercial production. Nevertheless, the risks were revealed timely and it will enable to take necessary measures on provision of safe operation by the commencement of the field development.
Question: What relations closely connect KazMunayGas to the unsettlement of the Caspian Sea status amid the expansion of Kazakhstan export capacities? Does the current agreement basis among the Caspian countries allow commencing the construction of the subsea oil and gas pipelines in the Caspian?
Answer: Indeed, unsettlement of the Caspian Sea Status negatively impacts the practical implementation of some projects related to the construction of pipelines via the Caspian ground. Though this question is of virtual character, it is necessary to take into consideration that the oil and gas pipelines with the length of tens of kilometers from the offshore fields of Azerbaijan and Turkmenistan to the coastal facilities have been built via the sea and now are operating.
Particularly, KazMunayGas is considering the potential capacities for the construction of the Trans-Caspian oil or gas pipelines Aktau-Baku.
The project in the construction of oil and gas pipeline should be coordinated with all Caspian countries, including Azerbaijan, Russia, Turkmenistan, Iran and Kazakhstan. However, the unsettlement of the Caspian Sea Status actually puts obstacles on the way of construction of the gas pipeline.
Moreover, I cannot agree that the problem impedes the expansion of export opportunities. As you know, by 2015 Kazakhstan intends to produce 150mln tons of oil per year, or 3mln barrels a day. The ground oil pipelines are capable of handling such export tasks, of course if all three famous projects are implemented вЂ" expansion of the Caspian Pipeline Company (Tengiz-Novorossiysk), increase of the discharge capacity of the Atirau-Samara oil pipeline and the construction of Atasu-Alashankow pipeline.
As to the oil transportation via the BTC system, in the first phase it would be enough just to carry out tanker deliveries from the port in Kurik to Baku. The construction of the oil pipeline via the Caspian ground will not limit us for a long period. Nevertheless, we are considering this possibility for final resolution by the Caspian countries on the resolution of the Caspian legal status.