Kashagan launch "imminent" claims Total

By bne IntelliNews September 2, 2013

bne -

The long-awaited launch of production at Kazakhstan's giant offshore Kashagan oilfield is "very close", a member of the international consortium developing the field, claimed on August 30.

The consortium is "optimistic" of production "starting imminently," Christophe de Margerie, CEO of French energy major Total told Bloomberg in an interview. "We had hoped it would happen already but we had a few little last-minute problems," de Margerie told the newswire.

An official production date for the mega-project is still to be announced, despite heavy pressure from the Kazakh government to get it up and running. Government officials have insisted recently that production will start by the end of October. However, despite the threat of heavy penalties should Kashagan fail to launch by the end of 2013, there is still speculation that the first output could be delayed to next year.

The technical difficulties of operating in the north Caspian, and the high levels of hydrogen sulphide at Kashagan, have resulted in repeated delays at the field. Astana initially hoped to see production begin as long ago as 2005.

That early hope is now eight years past, and meanwhile the government has increased the pressure on the consortium as it plots an economic boost from the start of production at Kashagan. At a government meeting on August 28, Economy and Budget Planning Minister Yerbolat Dossayev said Kazakhstan plans to raise oil production to 83m tonnes in 2014, rising to 110m tonnes in 2018.

The expected launch of production was also one of the factors taken into account by international ratings agency Moody's when it changed its outlook on Kazakhstan's Baa2 government bond rating from stable to positive in mid August. "Moody's expects annual GDP growth of around 5% in the next five years. A key driver supporting high growth rates in the medium term will be the Kashagan oil field, which is expected to come on stream later this year," Moody's said.

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