Problems with output at Kazakh Kashagan field likely to last for months.

By bne IntelliNews November 10, 2013

Oil production at the giant Kashagan field will not be resumed by the end of the year, ‘Dow Jones’ reported, citing ‘people with direct knowledge of the matter’. The output was halted in early October due to dangerous gas leak. The equipment which need to inspect the leaking pipeline will not arrive on site before mid-November and preliminary report on how to conduct repair work is expected in late December. North Caspian Operating Consortium which operates the field stated that it is too early to make any predictions.

Kashagan is the largest oil field in Kazakhstan and a very complicated project which already absorbed USD 40bn investments in the past decade. The consortium planned to launch production at the level of 18.5mn tonnes per year in 2015 with peak output seen at 75mn tonnes annually. Production at the field was launched on Sep 11 but two consecutive gas leaks led to indefinite stop on Oct 9.

NCOC partners are: KazMunayGas, ExxonMobil Corp. , Total, Eni and Royal Dutch Shell PLC each holds a 16.81% stake. In addition, Japan's Inpex has a 7.56% stake and China National Petroleum Corp. recently acquired an 8.33% stake from ConocoPhillips after KazMunayGas decided to exercise its pre-emptive right to buy the stake.  

Problems with production at Kashagan field will have negative impact on Kazakhstan’s GDP. The government expects economy to expand by 6% this year, supported by oil production from Kashagan. In long-term perspective, prolonging difficulties with operation at the field may push Kazakhstan to revise its oil production forecast.

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