Kazakhstan’s Giant Kashagan Oil Field Begins Commercial Output

Kazakhstan Seeks New Deal To Develop Delayed Kashagan Field

ASTANA Nov 21 (Reuters) – The Kashagan oil field has started commercial output, Kazakhstan’s energy minister said on Monday, marking a milestone for $55 billion project which is more than a decade behind its original production plan.

The offshore field in the Caspian Sea has produced about 0.5 million tonnes (3.8 million barrels) of oil since test pumping began on Sept. 28, Kanat Bozumbayev told parliament, and daily output has exceeded 75,000 barrels since Nov. 1.

Kashagan has recoverable oil reserves estimated at 9-13 billion barrels and is one of the world’s biggest discoveries in the last 40 years, according to the Kazhak oil ministry.

The former Soviet republic expects Kashagan to produce up to 1.1 million tonnes of oil this year and 4.0-8.0 million tonnes next year, helping to offset declines at mature fields in the country.

Discovered in 2000, the field was named after a 19th century Kazakh poet, Kashagan Kurzhimanuly. With its production difficulties, the field has lived up to its name which means “restive, uncontrollable.”

Production, originally due to begin in 2005, did not start until 2013 and then was halted shortly afterwards due to technical problems with gas pipelines.

Costs have also ballooned. The initial estimate was $57 billion for the project’s 40-year lifetime, but it has already cost about $55 billion to develop, according to analysts’ estimates.

The NCOC consortium developing Kashagan comprises China National Petroleum Corp, Exxon Mobil, Eni , Royal Dutch Shell, Total, Inpex and KazMunaiGas.

The field is set to ramp up output further during 2017 thanks to reinjection of sour gas into its reservoir, which will increase production to more than 150,000 bpd in 2017 and 230,000 bpd in 2018. Kazakhstan’s total production this year is forecast at about 1.6 million barrels per day.

Kazakhstan, whose economy is dominated by oil, is keen to push up production, but further expansion may be delayed if oil prices remain low, some analysts have said. (Reporting by Raushan Nurshayeva; writing by Olzhas Auyezov; editing by Louise Heavens and Jane Merriman)