In optimistic scenario, production at the world’s largest oil and gas field – Kashagan – may be resumed in the first half of 2016, Kazakhstan’s Minister of Oil and Gas Uzakbai Karabalin said.
Kashagan, which is Kazakhstan’s major project with total reserves of 38 billion barrels, remains in the centre of attention of both the world’s oil business and the public.
Production at Kashagan had been stopped last September due to gas leaks, two weeks after it had started. Almost immediately after the resumption of production in October 2013, another leak was found. Many months of examination revealed multiple cracks in the pipeline that had formed as a result of sulfur attack on the metal from the associated gas.
The project operator, North Caspian Operating Co (NCOC), confirmed this April that the entire 200-kilometer pipe line needed to be replaced.
A lot of questions arose in that connection. When, at last, will the country receive the first Kashagan oil, who’s to blame for the leaks on the pipeline, and who exactly will be held accountable for that?
“There are two scenarios for developments. Under the optimistic scenario, production will be resumed in the first half of 2016. Under the second scenario, subject to completion of the gas pipeline, we are looking at the second half of 2016,” Karabalin said.
He emphasised that the above time-lines would be adjusted based on the results of the studies currently carried out at the pipe manufacturing plants. The pipes must withstand the difficult Kashagan conditions.
It is expected that the manufacturing of pipes will begin this August, and the first shipment of them will be made in December 2014.
“But one of the key conditions affecting the start of commercial production is availability of barges for laying pipes in the Caspian Sea. This is a very important issue on which the project time-lines depend,” the minister said.
According to Karabalin, the pipeline-rebuilding related changes to the annual work program and the budget of the Kashagan project have not been finalised. The exact numbers will be available after the conditions of delivery and the prices of the pipelines manufactures to the required specifications get finalised.
“However, all these costs, including the building and purchase of the new pipelines, will not be reimbursed, and will have to be borne by the project partners,” Karabalin said.
He added that the shareholders would pay 30-million dollar compensation to Kazakhstan for the idle time of Kashagan.
Speaking about the reasons of the cracks in the pipes, the minister said that the investigation was still ongoing, and that the ministry of oil had concerns about the contractor’s welding quality and practices.
The ministry has been trying to find the real reasons for the leaks for the past half year. “In doing so, our ideas of the reasons differ from those of the contractors. We continue our own investigation. At the same time, the contractor is conducting its own investigation and talking to the supplier of the pipes. That is, there is a double investigation there,” he said.
The minister mentioned the working group that was set up to investigate the pipeline leaks.
“In July, in London, a second meeting took place where we discussed all arguments and issues. The negotiations continue, and everybody should come to a common understanding,” Karabalin said.
He added that a search of the guilty would be conducted among the contractors who performed the works.
In answer to a question whether the latest delay of the first Kashagan oil might affect the image of this promising, but difficult, project, the minister said one should be optimistic. “Kashagan is difficult to discredit. It is one of the largest oil fields in the world, and the professionals know its potential, which is an envy of any country, very well,” he said.
According to him, only amateurs can be pessimistic and skeptical about the future of Kashagan.
“We could believe the pessimists if there hadn’t been such an example, as the Tengiz field, which has the same conditions as Kashagan – high reservoir pressure and sour oil. Today, Tengiz plays an important role in the economy of Kazakhstan. As for Kashagan, it is necessary to plan the work correctly,” Karabalin said.
He added that the project management system was under re-organization, as the contractors themselves had admitted that the previous system was ineffective and costly.
http://www.neurope.eu/article/kashagan-production-seen-2016