Kazakhstan reportedly demands Kashagan production by July

By bne IntelliNews May 7, 2013

bne -

Kazakh officials are putting heavy pressure on the consortium developing the giant Kashagan oilfield to finally start production in early July, while the international oil companies working at the field maintain the launch of commercial production before September or October is unrealistic.

Delays have plagued Kashagan, the world's largest oilfield discovery in four decades. The start of production has been put back numerous times from the original target date in 2005 due to the technical complexities of the offshore project. The North Caspian Operating Company [NCOC] consortium - featuring Eni, ExxonMobil KazMuniGaz, Shell, Total, ConocoPhillips and INPEX - faces penalties if production is not launched by the end of 2013, but says that early autumn is now more realistic than an earlier projection of June.

However, the Kazakh government wants production to kick off on July 6, the birthday of President Nursultan Nazarbayev and the date that the Kazakh capital was moved to Astana. Newswire KazTAG cites an unnamed government source as saying that Eni - the lead operator for the first phase of the project via subsidiary Agip KCO - could have its role reduced due to the continued delays.

"At the moment talks are under way over a possible merger of the project's operator [North Caspian Operating Company] and NCPOC [North Caspian Productions Operations Company]. There is a probability that the oil processing facility may be taken away from Agip and entrusted to some other company," the source said. A joint venture between state-owned KMG and Shell, NCPOC is currently delegated to manage production operations of all phases at Kashagan.

At the same time, Oil and Gas Minister Sauat Mynbayev is understood to have asked the governor of the Atyrau region, where Kashagan is located, to also put pressure on the consortium to speed up their work. The source added that the foreign companies working at Kashagan were "very stressed" since they are "not accustomed to having jobs accelerated to get everything done by a specific date".

Kashagan, which was discovered in 2000, has reserves of around 4.8bn tonnes. The start of production will considerably boost the Kazakhstan's oil output, with a further leap expected when the second phase output begins. ConocoPhilips, is on the verge of selling its 8.4% stake, with speculation suggesting Astana is to block a deal to sell it to India in favour of a Chinese oil company.

Related Articles

Retail trade slows in Kazakhstan amid economic uncertainty

Naubet Bisenov in Almaty - A free-floating exchange regime for Kazakhstan’s currency, the tenge, is taking its toll on retail trade as the cost of imports rise. While prices have not changed ... more

bne:Chart - Russia begins to steady the ship according to latest Despair Index

Henry Kirby in London - Ukraine and Russia’s latest “Despair Index” scores suggest that the two struggling economies could finally be turning the corner, following nearly two years of steady ... more

New Kazakh central bank governor re-adopts free floating regime

bne IntelliNews -   The National Bank of Kazakhstan, the central bank, has re-adopted a free-floating exchange regime under the new governor, Daniyar Akishev, who has ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss