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North Caspian Operating Company, the joint venture operating Kazakhstan’s giant Kashagan oil and gas project in the Caspian Sea, said on Friday that it is currently ramping up production at the field to a capacity of 180,000 bpd, following the resumption of output in September last year.
Plans are that Kashagan Phase 1 would reach a production capacity of 370,000 bpd, once associated (sour) gas reinjection is started up and optimized, the company operating the field said. Exxon, Shell, Eni, Total, CNPC, and Japan’s Inpex, along with Kazakh state oil company Kazmunaygaz, are co-venturers in the development of the giant field.
Kashagan was first put into operation in 2013, but just a month later, production was suspended because of a gas leak. An inspection revealed that the whole 200-km stretch of pipelines set to transport oil and gas from Kashagan needed to be replaced because of micro-cracks, the result of high-sulfur associated gas running through them. Commercial-scale production resumed in October 2016 at a rate of 90,000 bpd, at the project which has cost US$50 billion to develop so far.
At the end of last year, the operating company said that it had obtained the approval of Kazakhstan’s government to begin early engineering and design work for further expansion of Phase 1 production at Kashagan. Once the project is completed, it could increase Phase 1 production capacity to a target level of 450,000 bpd.
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Increased daily production from Kashagan - thought to contain up to 13 billion barrels of recoverable oil – comes at a time when oversupply concerns continue to persist even after OPEC and non-OPEC producers, including Kazakhstan, have pledged to curtail global supply by a total of 1.8 million bpd in a bid to prop up oil prices.
Kazakhstan’s contribution to the cuts is just 20,000 bpd, and the country’s energy ministry said earlier this week it had already reduced supply by that amount since the beginning of January.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.