Agip KCO awards Kashagan field contract

Agip KCO let a $2.6 billion contract to Saipem and Aker Solutions to do the hook-up and commissioning for the first development phase of Kashagan field in the north Caspian Sea.

Uchenna Izundu
OGJ International Editor

LONDON, May 19 -- Agip KCO let a $2.6 billion contract to Saipem SPA and Aker Solutions to do the hook-up and commissioning of the offshore facilities, inshore completion, and prefabrication work for the first development phase of Kashagan field in the north Caspian Sea.

Saipem said the work would focus on oil and associated gas production by an artificial offshore facilities system called Block D and Block A. The inshore completion and prefabrication will happen in the Kuryk yard in Kazakhstan. All of the contracts will be completed by 2012.

"The very shallow water, the severe weather and the stringent environmental restrictions alongside the lack of infrastructure for the offshore industry make the project particularly complex and challenging," added Saipem. It will use five barges to carry out the work.

The hook-up contracts are the follow-ups of the letter of intent and preliminary agreements signed between Agip KCO, Aker Solutions, and Saipem in March 2007 for the early work for the hook-up.

Phase 1 of the project, dubbed the experimental program, is due online in late 2012 and 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 (OGJ Online, Feb. 2, 2009). The field, which is 80 km southeast of Atyrau, is expected to reach plateau production of 1.5 million b/d by the end of the next decade.

Saipem's portion of the contract is worth $1 billion while Aker Solutions' contract value is $1.6 billion.

Kashagan is one of the world's largest discoveries in the last 40 years and will cost $136 billion to develop, eventually doubling Kazakhstan's oil output to about 3 million b/d.

Contact Uchenna Izundu at uchennai@pennwell.com.

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