Kashagan to start production later this year

Kazakhstan’s troubled oil field Kashagan is expected to start production in late 2016, the country’s energy minister Kanat Bozumbayev said.

According to the info shared by the energy ministry earlier this week, Bozumbayev said Kashagan is expected to produce 35.000 tons in December.

To remind, Kashagan,named after a 19th century Kazakh poet from Mangistau, had started production in September 2013. However, the output had to be stopped weeks later after offshore gas leaks were detected.

After several studies into the causes of the leak the North Caspian Operating Company, the operator of the project on behalf of a consortium of seven oil and gas companies, decided to fully replace the affected offshore pipelines.

The contract for new pipelines was awarded to Italy’s Saipem in February 2015. Under the deal valued $1.8 billion, Saipem will build and install two 95-kilometer offshore pipelines.

According to the energy minister, repair and restoration work, as well as the replacement of the pipelines are in full swing at the Kashagan field.

The Kashagan field discovered back in 2000, is located in the northern part of the Caspian Sea, in the territorial waters of the Republic of Kazakhstan, and extends over a surface area of approximately 75 km x 45 km. It is estimated that Kashagan contains more than 35 billion barrels of oil in place.

Located 80 kilometers off the coast of Kazakhstan, the Kashagan site lies in the Northern area of the Caspian Sea. Water depths range from 2 to 6 meters, and temperatures fluctuate between -40°C and +40°C throughout the year, which lead the consortium to develop the field using artificial islands.

To protect the installations from enormous drifting slabs of ice, 11 million tons of rock were extracted from Kazakh quarries to build giant dikes. The shallowness of the water – only 2 to 6 meters – ruled out the use of traditional platforms, so a unique solution had to be found. This involved building an artificial island 1.7 kilometers long for the processing units and a number of smaller satellite islands for the production wells.

The shareholders have reportedly splashed over $50 billion on the development of the field but according to CNN Money’s article from 2012, Kashagan was the world’s most expensive energy project valued at $116 billion, with costs growing since.

The Kashagan project is operated by North Caspian Operating Company (NCOC) on behalf of the consortium to which the North Caspian Sea Production Sharing Agreement was awarded: Total, Eni, ExxonMobil, KazMunaiGas and Shell, 16.81% each; ConocoPhillips, 8.40%; and Inpex, 7.56%.