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Giant Kashagan oilfield could be out of production for two years.

It has been reported by overnight that the super-giant  Kashagan oilfield in the northern Caspian sea “will be out of production for at least two years”. The shutdown has been necessitated by leaks of toxic gas from a pipeline, with Quartz reporting that two new pipelines will now be required to replace the two existing oil and gas pipelines.” “As reported in the FT last month , the Kashagan field had already been beset by problems over many years, with production  only beginning on 11 September last year, nearly a decade behind schedule. So far it has only produced at a rate of about 75,000 barrels a day for only one month, as it was shut in again in October shortly after beginning to produce when the problem of toxic-gas leaks first became apparent. The FT’s report had already […]

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Sinopec to Pay $1.2 Billion for Lukoil’s Stake in Kazak Assets

China Petroleum & Chemical Corp. (386) , Asia’s biggest refiner known as Sinopec, agreed to pay about $1.2 billion to buy a 50 percent stake in energy assets in Kazakhstan from Russia’s OAO Lukoil. The deal is expected to be completed before the end of the year, Lukoil said in a statement. Lukoil’s Caspian Investment Resources Ltd. owns, through a number of joint ventures, various stakes in four hydrocarbon-production projects in Kazakhstan. Lukoil’s share in commercial hydrocarbon production as part of the projects was 10.2 million barrels of oil equivalent in 2013, it said. To contact the reporter on this story: Aibing Guo in Hong Kong at [email protected] To contact the editors responsible for this story: Jason Rogers at [email protected] Madelene Pearson

Posted On : Published By : Tom Whipple
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Kashagan – Back to the drawing board?

It should have turned Kazakhstan into a global oil and geopolitical champion. Instead, it turned out to be a cul-de-sac, swallowing over $50 billion since its discovery almost two decades ago. Kashagan, a mammoth-sized offshore oil field with recoverable reserves of some 13 billion barrels that stretches over more than 3000 square kilometers, was recently shut down indefinitely due to technical problems. With Kazakh ambitions scuttled and the reputation of the project-managing consortium in tatters, will it go down in history as the Titanic of oil fields? From euphoria to despair, Kashagan has been through it all. Major cost overruns, intense squabbles between major stakeholders, and insurmountable technical problems  prevented  the project from seeing daylight in 2005, as contractually required. Instead, it only began pumping the first barrels in September last year, but this lasted just a few days before the appearance of […]

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Total Says Kashagan Oil Field Won’t Yield Much Output This Year

An aerial view shows the artificial islands at the Kashagan offshore oil field in the Caspian sea in western Kazakhstan in this October 16, 2013 file photograph. PARIS— SA said Friday it doesn’t expect the to yield much output this year but said it was on the cusp of approving a $4 billion . The resumption of the Kashagan project has been beset with problems even since a tricky-to-fix gas leak forced the French company and its partners to stop production in October. "If there were to be any production by the end of the year, it wouldn’t be much," Total’s president for exploration and production, Arnaud Breuillac, told reporters on the sidelines of an oil conference in Paris. He said the companies are waiting for the results of analyses and ultrasound probes on the leaking pipeline to identify the problem and find ways to fix it. Resuming output […]

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Total Says Kashagan Oil Field Won't Yield Much Output This Year

An aerial view shows the artificial islands at the Kashagan offshore oil field in the Caspian sea in western Kazakhstan in this October 16, 2013 file photograph. PARIS— SA said Friday it doesn’t expect the to yield much output this year but said it was on the cusp of approving a $4 billion . The resumption of the Kashagan project has been beset with problems even since a tricky-to-fix gas leak forced the French company and its partners to stop production in October. "If there were to be any production by the end of the year, it wouldn’t be much," Total’s president for exploration and production, Arnaud Breuillac, told reporters on the sidelines of an oil conference in Paris. He said the companies are waiting for the results of analyses and ultrasound probes on the leaking pipeline to identify the problem and find ways to fix it. Resuming output […]

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OPEC gives poor marks for Kazakhstan’s Kashagan field

While oil supply from Kazakhstan has increased, its giant Kashagan oil field has "sucked in" major capital with little to show for it, OPEC said Thursday. The Organization of Petroleum Exporting Countries said in its monthly market report oil supply from Kazakhstan increased by 60,000 barrels per day year-on-year to average 1.64 million bpd. Kazakhstan hosts Kashagan, one of the largest oil fields in the world, with an estimated 16 billion barrels of oil reserves. Production was halted in October, less than a month after it started, when a pipeline associated with the field cracked open. OPEC said final results from pipeline inspections aren’t due until second quarter 2014, though the project has already consumed substantial investments. "The giant Kashagan project has sucked in almost $50 billion without yielding a barrel of oil," OPEC said in its market report. The North Caspian Operation Co. […]

Posted On : Published By : Tom Whipple
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OPEC gives poor marks for Kazakhstan's Kashagan field

While oil supply from Kazakhstan has increased, its giant Kashagan oil field has "sucked in" major capital with little to show for it, OPEC said Thursday. The Organization of Petroleum Exporting Countries said in its monthly market report oil supply from Kazakhstan increased by 60,000 barrels per day year-on-year to average 1.64 million bpd. Kazakhstan hosts Kashagan, one of the largest oil fields in the world, with an estimated 16 billion barrels of oil reserves. Production was halted in October, less than a month after it started, when a pipeline associated with the field cracked open. OPEC said final results from pipeline inspections aren’t due until second quarter 2014, though the project has already consumed substantial investments. "The giant Kashagan project has sucked in almost $50 billion without yielding a barrel of oil," OPEC said in its market report. The North Caspian Operation Co. […]

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Kashagan oil field hits restart delays

It may cost as much as 15 times more to rebuild the pipelines needed to restart operations at the giant Kashagan field in the Caspian Sea, a metallurgist said. Kashagan is one of the largest oil fields in the world, with an estimated 16 billion barrels of oil reserves. Production was halted in October, less than a month after it started, when a pipeline associated with the field cracked open. A source close to the project told online energy news website Quartz corrosive hydrogen sulfide found within the natural gas associated with the field causes the field’s pipelines to crack open almost as soon the hydrogen sulfide is exposed to moisture. Barry Hindin, a corrosion engineer at Battelle Memorial Institute, told the news site a nickel-based steel alloy that would resist hydrogen sulfide may cost the consortium operating Kashagan as much as 15 times more than conventional pipelines. In […]

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Kashagan Oil Field Seen as Unlikely to Restart This Summer

Production at the giant Kashagan oil field in Kazakhstan is unlikely to restart this summer as the companies involved in the consortium running the project are still awaiting a report on a gas leak that closed the field last October, people familiar with the project said Wednesday. Resuming output is important so the companies, which include Exxon Mobil Corp. , Royal Dutch Shell PLC, France’s SA and Italy’s SpA, can start generating revenue to recoup some of the $50 billion they have already invested in Kashagan over the last 17 years. It is also important for the Kazakh government, which had based its economic forecasts on revenue from Kashagan, where output was expected to ramp up to 370,000 barrels a day from 180,000 barrels a day initially. "There’s no date for restart, but it certainly won’t be this summer," said one person familiar with the project. In February, Claudio […]

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How a Giant Kazakh Oil Project Went Awry

Kazakh workers were recuperating from the frigid temperatures of the Caspian Sea over cups of tea when their Italian supervisor interrupted their break, demanding they return to work. The workers restrained the supervisor—a manager working for SpA, a company building a giant oil development here—and put a plastic bag over his head. He fled, packed his bags and left Kazakhstan. The spat was a brief episode yet emblematic of the endless challenges that have hobbled a project once hailed as the dawn of a new era in cooperation between oil-rich countries and Western companies. Asked about the 2011 incident, which was described by Western oil-company managers, a senior Eni executive said that he wasn’t familiar with it but that friction between workers and management is a periodic occurrence. Tantalizing rewards were envisioned for both sides from the oil project here, known as Kashagan, at the outset two decades […]

Posted On : Published By : Tom Whipple