KazMunaiGas, Shell to establish JV for Kashagan field

Kazakhstan's state-owned KazMunaiGas plans to establish a joint venture with Royal Dutch Shell PLC to handle production at the country's offshore Kashagan oil field.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Sept. 19 -- Kazakhstan's state-owned KazMunaiGas plans to establish a joint venture with Royal Dutch Shell PLC to handle production at the country's offshore Kashagan oil field.

"A joint venture between Shell and KazMunaiGas is being formed so that KazMunaiGas could take the lead in the production sector of the project" in 5 years, the Kazakh government announced.

It also announced that KazMunaiGas will be part of an operational model that is being created in the project, reiterating earlier reports that the Western companies developing the oil field would have new roles following completion of the project's initial development stage.

The consortium partners include operator Eni SPA, along with KazMunaiGaz, Shell, ExxonMobil Corp., Total SA, ConocoPhillips, and Inpex Holdings Inc.

The announcements come ahead of discussions, due for completion by Oct. 25, that are aimed at finalizing details of the project's future development, with KazMunaiGas at the centre of state plans to exert more control over the country's resources.

Earlier this week, consortium leader Eni said it plans to start production at Kashagan in 3 years, stating that its aims at production of 150,000 b/d from fourth quarter 2012—a date well ahead of earlier claims.

The Eni statement was especially at odds with one by Tumir Kulibayev, head of the KazEnergy association, who told an energy conference in early September that production was more likely to start in 2014 than any time earlier due to inclement weather conditions (OGJ Online, Sept. 4, 2008).

In June Kazakhstan and the Kashagan consortium agreed to put off the start of production to 2013 from 2011. The partners originally had targeted a start up date in 2005.

Contact Eric Watkins at hippalus@yahoo.com.

More in Drilling & Production