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Kazakh firm to build Kashagan gas plant
KAZAKHSTAN
The little-known contractor was registered last year.
THE Kazakh government has announced that an unknown local firm will be tasked with build- ing a $860mn gas processing plant (GPP) at the country’s largest oilfield, Kashagan.
The office of Prime Minister Askar Mamin said on February 27 that the plant, capable of handling 1bn cubic metres per year of Kashagan’s gas, would be erected by GPC Invest. GPC Invest was registered in February last year in Kazakh- stan’s coastal Atyrau region. NewsBase could not confirm its owners.
Kashagan is situated in the Caspian Sea, but the plant will be positioned in the coastal Atyrau region, near the Bolashak oil and gas treatment complex. Bolashak can process up to 450,000 barrels per day (bpd) of oil and 3.2 bcm per year of gas from Kashagan.
The new GPP, due on stream in 2021, will enable Kashagan to expand its oil production, by processing more of the associated gas released as a by-product. The government first revealed that its construction was being considered in Septem- ber. Discussions were underway with Kashagan’s international operator, the North Caspian Oper- ating Co. (NCOC), officials said, but the consor- tium is yet to confirm the project’s approval.
NCOC’s shareholders include Italy’s Eni, France’s Total, Royal Dutch Shell, US major Exx- onMobil, China’s CNPC and Japan’s Inpex.
Production levels at Kashagan have been vol- atile since its launch in late 2016, as a result of the field’s geological complexity and more recently, technical errors. The new plant will help NCOC realise the full potential of Kashagan’s first phase development. Kazakh officials have said its out- put could reach as high as 500,000 bpd – equiv- alent to around 0.5% of global oil production. Under additional phases it has been suggested the field could flow at a rate of 1mn bpd.
Kazakhstan has sought to expand the role of Kazakh contractors at Kashagan and its other major oil and gas projects, in order to build up its domestic manufacturing capability. This insist- ence on local content was a key factor behind delays and cost overruns recently reported at the onshore Tengiz oilfield, industry sources have previously told NewsBase.
The Future Growth Project and Wellhead Pressure Management Project (FGP-WPMP) at Tengiz is now slated to cost $46.5bn, around 25% more than budgeted in 2016. Its launch has also been pushed back by one year to 2023.
PROJECTS & COMPANIES
Russia mulls switching coal power plant to gas
RUSSIA
The project has been discussed for more than a decade.
RUSSIA’S state-owned power utility Inter RAO wants to convert a major thermal power plant (TPP) planned in the Far East to run on gas instead of coal, Kommersant reported on March 1.
Inter RAO has been discussing the stalled Yerkovetskaya TPP project in the Amur region with Chinese partners for more than a decade. The project was originally expected to have a capacity of up to 8,000 MW and to export some 30-50mn MWh of electricity to China each year via a new transmission line.
Inter RAO later decided to downsize the plant’s capacity to 4 GW, because of low- er-than-anticipated demand in China. Now, according to Inter RAO’s head of strategy and investment, Alexey Maslov, the firm wants to fuel the facility with gas rather than coal from a nearby coal mine.
“Fuel for this project has not been fully determined. Various options are being consid- ered, including a tie-in to the Power of Sibe- ria pipeline,” Maslov was quoted as saying by Kommersant.
He also said the plant’s planned capacity had beenfurtherreducedtojust1GW.
The 38bn cubic metre per year Power of Siberia gas pipeline came on stream at the start of December, initiating shipments of gas from fields in Eastern Siberia to China. Its completion is predicted to help galvanise development of gas resources in the region, which previously lacked any major gas infrastructure.
Back when its planned capacity was 8 GW, the Yerkovetskaya station had been projected to cost $20-25bn. According to Kommersant, a 1-GW gas-based plant would cost around 110- 130bn rubles ($1.65-1.95bn) to build.
The main obstacle towards the project’s implementation remains demand uncertainty in China. Inter RAO is yet to reach power purchase agreements (PPAs) with Chinese buyers, which it would need in order to take a final investment decision (FID) on construction.
If the company does opt to switch the plant to gas, this also raises doubts about whether the nearby Yerkovetskoye coal mine will be devel- oped. The mine contains lignite, otherwise known as brown coal, which is of poor quality and therefore often unprofitable to export. Yerk- ovetskoye could produce up to 35mn tonnes per year (tpy) of coal at full capacity.
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