Resumption of production at Kashagan unlikely before 2017, says expert

Resumption of production at Kashagan unlikely before 2017, says expert

Baku, Azerbaijan, Apr. 30

By Elena Kosolapova - Trend:

Resumption of production at the Kashagan field in Kazakhstan is unlikely to happen in 2015 or 2016, according to Oleg Yegorov, the senior fellow at the Institute of Economics of the Kazakh Education and Science Ministry.

"I believe it will not take place before 2017," Yegorov told Trend by telephone April 30.

Kazakhstan expects the oil production at Kashagan to resume in late 2015 or in 2016.

Yegorov recalled that it is needed to replace about 200 kilometers of pipes at the field. The work should be conducted not only on the coast, but also on an artificial island built at the field and in the sea.

"In technical terms, it is quite complex and long-term work," he said. "Aside from that, it will be possible to conduct work on the offshore site in the warm season, because in winter the sea near the Kashagan field is frozen."

Moreover, as the expert said, depending on the situation on the world market, it is possible that the resumption of production at Kashagan will not start in 2017 either and will be postponed to a later date.

"In particular, if the oil demand is less than the offer, and the oil prices remain for a long time at a low level, the production at Kashagan may prove to be unprofitable, and the field can be mothballed for some time," said the expert.

Egorov reminded that the developers of Kashagan had to make huge amount of investments in this field. Now, they are required to additionally invest over $2 billion for changing the pipes, he said, adding that moreover, the shareholders of the project should pay a huge amount of fine as they haven't put the field into operation in the time envisaged in the contract.

He said that in order to ensure the profitability of oil production at Kashagan, the oil prices should be $80-$90 per barrel. The production at the similar offshore fields, for instance, in the Gulf of Mexico or the North Sea became profitable with these prices, he said.

"No one will work at a loss," Egorov said.

He added that all the timeframes and obligations of the project's operator envisaged in the contract have long ago been violated.

The expert reminded that the first time when the developers were supposed to put the field into operation in 2005, they gave Kazakhstan the chance to repurchase the first part of its share in the project (8.3 percent). Two years later, they were supposed to put the field into operation again, but they didn't and as a result, the shareholders sold over 8 percent more to Kazakhstan, he added.

Therefore, another postponement of field's launch for one reason or another will not be something extraordinary, but just another violation of the contract, Egorov added.

At the same time, even if oil production at Kashagan is resumed, investments in this project will not pay off very soon, because production volumes will be small at the initial stage, according to the expert.

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; some 10 billion out of them are 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.

Edited by CN

---

Follow the author on Twitter: @E_Kosolapova

Russian doctor who met Putin last week diagnosed with coronavirus
Russian doctor who met Putin last week diagnosed with coronavirus
Putin, Trump discuss closer cooperation in fighting Covid pandemic, says Kremlin
Putin, Trump discuss closer cooperation in fighting Covid pandemic, says Kremlin
All Moscow’s residents to stay in home self-isolation from Monday
All Moscow’s residents to stay in home self-isolation from Monday
Loading Bars
Latest
Rystad Energy: Jet fuel to be hit hardest by coronavirus
Germany reports 5,453 additional coronavirus cases, 149 more deaths
Magnitude-6.5 quake strikes U.S. Southern Idaho
Over 8,500 coronavirus cases confirmed in Canada — health ministry
Over 750,000 COVID-19 cases, more than 36,000 deaths confirmed worldwide — WHO
Mexico registers 1,215 coronavirus cases, 29 deaths: health ministry
Over 5,00 cases of novel coronavirus confirmed in Israel — health ministry
Number of coronavirus cases in Belarus up to 163 — health ministry
Prince of Monaco recovers from coronavirus
Some ultra-Orthodox Israelis chafe at coronavirus restrictions
Xerox abandons $35 billion hostile bid for HP
Chanel turns its workshops to making face masks against coronavirus
Russian doctor who met Putin last week diagnosed with coronavirus
Eurovision to hold special concert instead of contest cancelled due to pandemic
US coronavirus death toll surpasses China’s
Turkey set to release some 45,000 inmates in coronavirus response
Azerbaijani MP discloses number of entrepreneurs to be provided with state support
OSCE Minsk Group co-chairs make statement on so-called “elections" in Nagorno-Karabakh
Iran promises financial aid to newspapers amid social distancing plan
S&P talks rating action on subsidiaries of Kazakhstan's KazMunayGas
First coronavirus case confirmed in one more Kazakh region
Energy expert: European companies to gradually enter into trade with Iran
Uzbekistan suspends work of cash offices, exchange offices located outside banks
Kazakhstan lifts ban on export of some petroleum products
CAERC talks Azerbaijan's major anti-crisis program
Data on payments in Azerbaijani insurance market for February 2020 published
Uzbekneftegaz brings Uzbekistan's energy industry to new level
Kazakh-Chinese oil and gas company opens tender to buy paint materials
Iran eyes refineries in other countries as alternative to falling oil sales
Operational Headquarters: Azerbaijan suspends air, rail traffic with Russia
NCOC talks on following production plans at Kashagan field in Kazakhstan
Georgian seaports continue operations
Uzbekistan conducting tests of citizens for coronavirus
Turkmenistan to accelerate transformation of agro-industrial sector
Azerbaijan's economy minister appeals to heads of subordinate structures
Chairman of Georgian Oil Importers Union talks about fuel prices
Operational Headquarters: Baku Metro to suspend work
Kazakh Gas Refinery announces tender to buy spare parts
Exports of products through Iranian ports of Abadan announced
Uzbekistan to export peanuts to China
Azerbaijan's Health Ministry distributes information materials related to coronavirus
GUAM expresses solidarity with Azerbaijan in honoring memory of March 31 genocide victims
European expert: Azerbaijan reacts to threats adequately and carefully
Volume of money tranfers increases in Kazakhstan
Azerbaijani MP: Situation with coronavirus may aggravate if citizens fail to comply with rules
Uzbekistan purchases special equipment abroad to battle coronavirus spread
Iranian President: 80% of the population likely to be infected with virus
President Ilham Aliyev received minister of economy (PHOTO)
EU to allocate additional funds to Georgia to overcome coronavirus crisis
More people test coronavirus-positive in Azerbaijan, one passes away
COVID-19 to drag down capex for exploration and production
Operational Headquarters: Dynamics of growth of coronavirus cases observed in Azerbaijan
Zenith Energy inks Letter of Intent to provide investment in its share capital
COVID-19 is not expected to be significant at Shell Group level
Donations to Azerbaijan's Fund to Support Fight against Coronavirus increase
Shell reveals oil production forecasts in Upstream
Collection of mandatory health insurance contributions to begin in Azerbaijan in 2021
E-Commerce in Turkmenistan gaining momentum
Azerbaijani Ministry of Education voices new virtual initiative
Data on collections in Azerbaijan's insurance market for February 2020 disclosed
Turkmenistan sets task to equip country with qualified engineers, technicians
Retired NASA astronaut gives advice on ways to deal with self-isolation amid coronavirus battle
GUAM condemns so-called “elections” in Azerbaijan’s occupied territories
Minister: Georgia to continue infrastructure projects
Coronavirus deathtoll increases in Iran
Oil production in Azerbaijan to be continued in accordance with plan for 2020
Turkey - Azerbaijan trade turnover sees growth in February
Iran rejects FATF, seeks ways to evade sanctions amid COVID-19 spread
Azerbaijani community of Nagorno-Karabakh disseminates appeal on Day of Genocide
Azerbaijan to use drones for disinfection
Number of Iranian MPs infected with coronavirus announced
Illegal regime established by Armenia in Azerbaijan's occupied territories is nothing other than product of aggression
Turkey's export of ready-made clothing to Iran down
Ineos to build third hand sanitizer plant in France in 10 days
Europe sends medical goods to Iran in trade test
Diplomat: Turkey condemns Armenian murderers for March 1918 genocide of Azerbaijanis
Exports of products via Iran's Arvand Free Trade Zone announced
Spain registers overnight death toll of 849, highest so far
Dubai promises state support, new funding for Emirates airline
Baku Higher Oil School receives license for global distance education program
Minimum pension in Iran to be increased
Azerbaijan’s chief infectiologist talks non-compliance with quarantine
EU doesn’t recognize constitutional, legal framework within which so-called “elections” in Karabakh are being held
Novel coronavirus may lead to reduced lung function - research
Azerbaijan shoots film dedicated to Day of Genocide of Azerbaijanis (VIDEO)
Turkey discloses volume of crude oil transshipment via its ports
Uzbek-Chinese JV continues to produce natural gas in Uzbekistan
President Ilham Aliyev: Some people act irresponsibly, therefore, measures will be further tightened
Volume of bentonite transshipment via Turkish ports revealed
Azerbaijani government fighting against pandemic amid global economic downturn
Iran announces damages done to raw materials production due to coronavirus
President Ilham Aliyev: We are a great people, we were able to unite in most difficult time
Georgian economy up in February 2020
Turkmennebit state concern opens tender for purchase of equipment, construction materials
Volume of cargo transshipment from Syria via Turkish ports disclosed
MP: So-called "elections" in pandemic conditions show indifference of Armenian leadership to security in region
Rouhani: Uninsured coronavirus patients insured in hospitals in Iran
Weekly review of Georgian capital markets
Baby born infected with coronavirus in Iran
Turkey's foreign trade turnover increases
All news