Although fundamentals in natural gas…
Seemingly unimpressed by the OPEC…
After years of delay, the Kazakh oil and gas minister announced on Tuesday that the Kashagan oilfield was finally ready to start producing crude oil for the first time within days, helping the multinational consortium responsible for its development to avoid any fines associated with missing the production deadline of the 1st October.
The consortium is estimated to have spent $50 billion over the past 13 years in developing the giant oil field located in the Caspian Sea just off the west coast of Kazakhstan, making Kashagan not only the world’s largest discovery in decades, but also the most expensive.
The original production target set by the North Caspian Oil Company (NCOC) was in 2005, in line with the country’s ambitious target of becoming one the world’s top 10 oil producers by 2015.
Reuters claim that the repeated delays in launching Kashagan unnerved Kazakhstan, causing authorities to set a final deadline of the 1st October, and claiming that recompense to consortium members for part of the project costs would be refused if oil was not flowing before the end of September.
Related article: China Buys $5 Billion Stake in Kazakhstan’s Giant Oil Field
Sauat Mynbayev, head of Kazakh national oil and gas company KazMunaiGas, told reporters on Saturday that test oil would be produced from the field on the 9th September. However the Oil and Gas Minister Uzakbai Karabalin announced on Tuesday that the test had been delayed again, although “we expect it any day. If everything is done on time, what penalty sanctions can there be?”
Once a test is performed and passed it will take between three weeks and a month to reach full commercial output.
Kazakhstan holds three percent of the world’s recoverable oil reserves, and is relying heavily on output from Kashagan to boost production levels from 82 million tonnes in 2013 to 83 million tonnes in 2014, and eventually 110 million tonnes by 2018.
Chinese President Xi Jinping, along with his Kazakh counterpart President Nursultan Nazarbayev, have just witnessed the signing of an agreement between the China National Petroleum Corp and KazMunaiGas, for the purchase of a 8.33 percent stake in the Kashagan project for $5 billion.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com