The newly formed North Caspian Operating Co. BV (NCOC), as part of earlier agreement, has replaced the Agip KCO consortium as operator of Kazakhstan’s Kashagan oil field development project, also known as the North Caspian Sea production-sharing agreement, or NCS PSA.
The Eni SPA-led Agip KCO consortium, which earlier confirmed that the project will reach a maximum output of 1.5 million b/d by the end of the next decade, agreed in October 2008 to hand over operating control of Kashagan to NCOC this month.
NCOC, which is incorporated in the Netherlands, is comprised of all the partners in the NCS PSA consortium, including KazMunayGaz, Eni SPA, Total SA, ExxonMobil Corp., and Royal Dutch Shell PLC, each holding 16.81%; ConocoPhillips 8.40%; and Inpex 7.55%.
New operating model
Under terms of the new operating model, which became effective on Jan. 22, NCOC will oversee all of the project’s activities. It will manage planning, coordination, reservoir modeling, conceptual studies, appraisal plans, early development plans, and government interfaces.
NCOC will be staffed by representatives of all partner companies and, according to reports, will be run largely in line with the Total SA management system.
The managing director of the new joint operating company will be on rotation among the partners, and the position initially will be held by a Total SA executive, while the deputy managing directorship will be held by an executive of KazMunayGaz.
Although NCOC will oversee the project, under terms of the agreement struck by the consortium partners and the Kazakh government last October, some of the partners will still have direct responsibilities for the project’s execution.
Two-phase development
Phase 1 of the project, which is due online in late 2012, will be under the responsibility of Eni SPA. Under Phase 1, oil production is expected to reach 300,000 b/d, increasing to 450,000 b/d during Phase 2.
Shell will manage the production operations after the start-up of Phase 1, with KazMunayGaz assuming greater responsibility over time.
Meanwhile, Phase 2 will fall under the responsibility of three partners: Shell for offshore development, Eni for the onshore plant, and ExxonMobil for the drilling.
To carry out their responsibilities, Eni, Shell, and ExxonMobil will have appropriate authority on matters such as staffing, procurement, and operating procedures, and they will apply their own companies’ management systems.
Meanwhile, in mid-January, Aker Solutions announced that, in a joint venture with CB&I and WorleyParsons, it received a front-end engineering and design (FEED) services contract valued at $135 million for Phase 2 of the full-field development of Kashagan field.
The scope of work for Phase 2 includes the FEED for both onshore and offshore facilities and pipelines.
Aker said the FEED contract also includes options for early works, detailed engineering, procurement services, technical assistance, and design-system integrity.
Work on the project, initiated after tendered under a letter of intent issued by Agip KCO, began on Nov. 3, 2008, and it is expected to complete in first-quarter 2010.
Shareholders in the joint venture company (K-WAC Ltd.) include WorleyParsons Europe Ltd. 45%, CB&I UK Ltd. 25%, and Aker Engineering & Technology AS 30%.
Aker Solutions and WorleyParsons also are engaged in the execution of Phase 1 of the Kashagan project, performing detailed design, fabrication, and hookup.
