Kazakhstan's giant Kashagan field in the Caspian Sea is now seen delivering first oil production in 2014, later than the previously announced date of October, 2013, the head of a Kazakh energy association said Thursday.
Timur Kulibayev, chairman of the KazEnergy association and an influential son-in-law of the Kazakh president, told reporters that it would be "impossible" to launch Kashagan oil production by the late 2013 date. Severe winter weather conditions at that time, when the consortium aims to have the project ready, would prevent its production startup until 2014, he said.
KazEnergy is an association of major oil and gas companies in energy-rich Kazakhstan.
Kairgeldy Kabyldin, chief executive of Kazakh state oil and gas company KazMunaiGas, which is part of the consortium developing Kashagan, had said at a press conference Thursday that the memorandum signed earlier this year indicated production was expected to start in 2013.
But Kulibayev, seated beside him at the conference, then said that first Kashagan output would come in 2014 at 450,000 barrels a day.
Kabyldin didn't comment on Kulibayev's statement about a further delay in the expected startup of output from Kazakhstan's largest oil field.
Kashagan production is expected to peak at 1.5 million barrels a day, which represents almost 2% of current demand. The consortium developing Kashagan has faced repeated delays in the projected startup, initially set for 2005, later pushed back to 2008, 2010-11 and 2013, due to rising costs and difficulties of the project. The consortium is expected to finalize its revised deal with the Kazakh government in October this year.
Members of the consortium are KazMunaiGas, Eni SpA (E), Total SA (TOT), Exxon Mobil Corp. (XOM), Royal Dutch Shell PLC (RDSB.LN), ConocoPhillips (COP) and Japan's Inpex Holdings Inc. (1605.TO). Eni leads the consortium.
An Eni spokeswoman declined to comment.
A dispute over rising project costs and delays flared up between the consortium and the Kazakh government last year. As part of the deal to resolve the matter, KazMunaiGas agreed to doubled its stake in the project to 16.8%.
The consortium reached "full settlement" over the project with the Kazakh government and this will be finalized in a definite accord by the end of October, said Eni Chief Executive Paolo Scaroni July 31.
Eni said the accord included a "variable value transfer mechanism extended to higher oil prices." It means "the higher the oil price, the lower our (output) take," said Scaroni, without giving specific details.
Kashagan is estimated to hold recoverable reserves of 13 billion barrels of oil. The project, located in the northern part of Caspian Sea, was billed as the largest oil discovery in some 30 years when it was found at the end of the 1990s.