Kazakhstan expects Kashagan to resume oil production in December 2016

By bne IntelliNews December 9, 2015

Oil production in the embattled offshore Kashagan field will be relaunched in December 2016, Deputy Minister of Energy Magzum Mirzagaliyev told the government on December 8. He added that pipelines linking Kashagan with onshore facilities were being replaced ahead of schedule. In 2020, production at Kashagan is expected to reach 13mn tonnes of oil a year.

The repeated delays in oil production in the field have prompted many observers to abandon the inclusion of projected production figures for Kashagan in Kazakhstan's economic outlook. Standard & Poor's has said that it will not consider Kashagan's impact on the country's economy until 2018 by which the field will eventually start producing oil.

Production at Kashagan, under development by the international consortium NCOC, was launched on September 11, 2013, but a leak on the gas pipeline running to the onshore processing facility at Bolashak led production to be halted on September 24. An attempt to restart operations was abandoned on October 9. The consortium is now replacing the pipelines at a cost of $3bn although low global price of oil and uncertainty over the production costs make the field prospects blurred.

Stake holders in Kashagan are Eni, Shell, Total and ExxonMobil, each holding a 16.81% stake in the project and Japan's Inpex with a 7.56% stake. US major ConocoPhilips sold its 8.33% stake to KMG for $5.4bn in 2013, which in turn sold it to China's CNPC. Kazakhstan holds a 16.81% stake in the project through national oil and gas company KazMunayGas and the national sovereign wealth fund Samruk-Kazyna. Kashagan is the the second largest field in the world. 

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