By OGJ editors
HOUSTON, Feb. 25 -- Kazmunaygaz (KMG), the petroleum authority for Kazakhstan, and the North Caspian Sea production-sharing agreement consortium have approved development plans for the world-class Kashagan oil field in the northeastern Caspian Sea. The approval was announced Wednesday in Astana, Kazakhstan.
Consortium members are operator ENI SPA unit Agip Caspian Sea BV, ExxonMobil Kazakhstan Inc., Shell Kazakhstan Development BV, and Total E&P Kazakhstan each with 16.67% interest; ConocoPhillips Petroleum Kazakhstan Ltd. 8.33%; and Tokyo-based Inpex Corp. 8.33%.
British Gas PLC also currently holds 16.67%, but last year five of the partners elected to purchase its interest, preempting its agreements to sell its stake to two Chinese companies. Upon completion of the preemption transactions and subject to Kazakhstan government approval, Agip, ExxonMobil, Shell, and Total each will own 20.37%; ConocoPhillips will own 10.19%; and Inpex will maintain its 8.33% interest (OGJ Online, May 16, 2003).
Kashagan, one of the largest discoveries in the last 30 years, is projected to have ultimate production of as much as 13 billion bbl of oil (OGJ Online, June 28, 2002). Development will be implemented in multiple phases: Initial production of 75,000 b/d of oil will begin in 2008, with later phases ramping up to 450,000 b/d of oil and subsequently reaching a plateau of 1.2 million b/d of oil.
Capital investment for full field development currently is estimated at $29-30 billion over 15 years, with the first phase—currently under way—expected to amount to about $10 billion.
Development challenges
Instrumental in gaining approval was a careful and thorough analysis of how best to preserve the area's delicate ecosystem, the partners said.
Kashagan development represents significant technical and technological challenges for the consortium because of the area's severe climatic conditions and sensitive environment, along with the supergiant field's high reservoir pressure and the presence of hydrogen sulfide.
The plan addresses those unique technical challenges, along with the field's relative remoteness and lack of established infrastructure, the partners said. ENI currently is completing a study to identify the best oil export routes in the Caspian region.
To reduce sulfur handling and improve oil recovery, the consortium will build onshore gas processing facilities and offshore facilities for injecting raw gas back into the reservoir.
A boon to Kazakhstan
This huge endeavor will positively impact Kazakhstan nationally and locally through tax and royalty revenues, direct and indirect employment and contractor opportunities for Kazakh companies and individuals, local infrastructure development, and community assistance programs, the project sponsors said.
Investment in the training of Kazakh employees and executives for the project also should support the growth of the Kazakh petroleum industry, and ENI already has launched training programs for young engineers and managers of the Kazakh petroleum industry.
