Kashagan offline to end of year

By bne IntelliNews November 11, 2013

bne -

Production at Kazakhstan's giant offshore oil field Kashagan will not resume until 2014, an official said on November 10. The shutdown extends the troublesome start for the mega project, and is likely to stir anger in the government.

Speaking at a press conference in Abu Dhabi, Christophe de Margerie, CEO of France's Total - one of the companies developing the field - admitted production at the giant field would not resume by the end of 2013, Reuters reports. "It will not restart before the end of the year ... It's more than simply repairing pipes," he said.

Despite a much-publicized production launch in September, Kashagan has since managed a total of just three weeks pumping oil and gas due to a series of technical problems. The Kazakh government put considerable pressure on the international consortium developing the field - the world's largest hydrocarbons discovery in the last three decades - to launch production before the end of 2013. That urgency from Astana followed delays of years at the technically complex field.

The long-awaited start of production finally took place on September 11, but output was suspended just two weeks later due to a gas pipeline leak. After being put back into operation on October 6, the field managed three days of production before shutting down again.

Another leak, this time between one of the man-made islands and the onshore Bolashak processing plant was to blame. A statement from the North Caspian Operating Company (NCOC), issued on October 24, warned that production could be suspended for several weeks while repairs were carried out. That has now extended to months.

Kashagan is a vital componenet in the Kazakh government's plan to increase oil production to 108m tonnes a year by 2025. Increased production at the Karachaganak and Tengiz fields are the other major contributors planned.

However, while substantial increases in oil production are expected in future, Kashagan was also slated to offer a boost to economic growth in the short term. Astana has made it clear it is unimpressed with the delays at the field.

The Kazakh government initially hoped production would start way back in 2005, with investment slated to come in around $10bn. The actual launch of production was eight years later, and cost around $46bn. With estimated reserves of 35bn barrels of oil, the government expects the project to help boost GDP growth and establish the country among the world's top oil exporters.

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