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Oil Production Starts At Giant Kashagan Field

Commercial-scale production at Kazakhstan’s giant Kashagan field in the Caspian Sea has started at a daily rate of 90,000 barrels, the country’s Energy Minister Qanat Bozumbaev said. The field is operated by a consortium including Exxon, Shell, Eni, Total, CNPC, and Japan’s Inpex, along with Kazakh state oil company Kazmunaygaz.

Kashagan, the biggest oil discovery in Kazakhstan in about four decades, holds an estimated 38 billion barrels of crude and a trillion cubic meters of natural gas. Of the oil reserves, 10 billion barrels are recoverable.

The field was first put into operation three years ago, but just a month later production was suspended because of a gas leak. An inspection revealed 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.

Kazakhstan is the largest oil producer in Central Asia and ranks 18th in the world, with annual production of 1.72 million barrels per day as of two years ago. This year, however, according to OPEC, production is set for a decline to 1.56 million bpd, from the 2015 daily average of 1.6 million barrels.

The revision comes after in August, Kazakhstan pumped around 1.27 million bpd, down 300,000 bpd from July on the back of scheduled maintenance at the TengizChevroil field, also in the Caspian.

Again according to OPEC, production at Kashagan should reach 370,000 bpd by June next year, and the country’s overall growth in oil production should average 220,000 bpd through the end of 2017.

Kazakhstan is not a member of OPEC, and as such is not taking part in the number-one news item in global energy these days: the freeze agreement that OPEC is discussing with Russia. It’s not as big of a producer as Russia is, but if output at Kashagan rises as OPEC expects, this will be an increase in global production that trumps the 160,000-bpd OPEC rise in August that curbed the upward movement in international oil benchmarks caused by the news about the freeze.

By Irina Slav for Oilprice.com

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