Eni: Kashagan field more 'generous' than thought

Jan. 26, 2007
Kashagan oil field in Kazakhstan is more "generous" than expected, said Eni SPA's Chief Executive Paolo Scaroni Jan. 25, indicating that Kashagan may have higher production rates than originally anticipated.

Uchenna Izundu
International Editor

LONDON, Jan. 26-- Kashagan oil field in Kazakhstan is more "generous" than expected, said Eni SPA's Chief Executive Paolo Scaroni Jan. 25, indicating that Kashagan may have higher production rates than originally anticipated.

The Eni-led project in the North Caspian Sea has been delayed by environmental problems and technical challenges. Production, planned to start in 2005, has been postponed to 2009.

Kazakh state-owned energy company KazMunaiGaz is investigating the project to determine why higher costs and delays have occurred. Scaroni said audits are normal, and Eni is not worried by the checks. Within coming weeks, it will publish a schedule and cost structure for starting commercial oil extraction at Kashagan, he added.

Eni in 2004 estimated field development at $29 billion over 15 years. Last March, Eni increased costs for Kashagan by $4-5 billion because of a weakened dollar and higher equipment costs.

The Caspian Sea is shallow and freezes from November-February, posing access problems for the consortium. Meeting stringent environmental standards is proving costly and time-consuming, and the field's high pressures and levels of hydrogen sulfide are complicating field development.

Kashagan has recoverable reserves of 13 billion bbl. It will be developed in multiple phases: Under Phase I, production will reach 75,000 b/d and gradually increase to 450,000 b/d. Production will increase during the following stages at an expected plateau of 1.2 million b/d.

Contact Uchenna Izundu at [email protected].