Page 11 - FSUOGM Week 23

FSUOGM PERFORMANCE FSUOGM
Kashagan reaches new production high
KAZAKHSTAN
OUTPUT at Kazakhstan’s giant Kashagan oil- eld soared to a record high of 400,000 bpd on June 7, according to Reuters.
The production spike follows a 45-day maintenance shutdown at the o shore site that concluded in late May. Prior to the closure, the eld had been pumping oil at a rate of 330,000- 340,000 bpd.
In an emailed response to Reuters, Kazakh- stan’s energy ministry said production at Kasha- gan was slated to total 15.4 million tonnes (309,000 bpd) in 2020, up from 13.3 million tonnes (267,000 bpd) this year.
e North Caspian Operating Consortium (NCOC) managing Kashagan is currently work- ing to boost gas injection, in order to ramp up production to as high as 470,000 bpd. e inves- tors are dra ing plans for the eld’s second devel- opment phase.
Kashagan is one of the world’s biggest oil nds in decades, containing between 9 and 13 billion barrels of oil. But its development was mired by delays, cost overruns and disputes between
investors and the Kazakh government.
e eld was rst identi ed in 2000, but it took the North Caspian Operating Consortium (NCOC) another 13 years to launch production. Operations were then shut down within weeks, a er it became clear that the project’s entire pipe- line system would need to be replaced to with-
stand sulphur corrosion.
e project was relaunched successfully in
2016, by which point total costs had exceeded US$55 billion. NCOC has also had difficulty keeping output stable since then due to the com- plexity of Kashagan’s gas reservoirs.
High costs could explain French oil com- pany Total’s alleged plan to cut its 16.8% stake in Kashagan by around a third. Sources told Reu- ters last month that the oil major had engaged in talks with a Chinese company on the sale. Bei- jing’s state-owned CNPC holds an 8.3% interest in Kashagan, while other shareholders include ExxonMobil, Royal Dutch Shell, Italy’s Eni, Kazakhstan’s KazMunayGas (KMG) and Japan’s Inpex.™
PROJECTS & COMPANIES
Lukoil sets sights on second offshore project in Kazakhstan
KAZAKHSTAN
RUSSIAN oil major Lukoil is eyeing a second project o shore Kazakhstan, fresh from sealing a deal to develop the Zhenis block in April.
In a statement on June 7, the company said it had reached an “agreement in principle” with Kazakhstan’s national oil concern, KazMunay- Gas (KMG), to explore the I-P-2 contract area. e block lies in the Caspian Sea some 130 km from the shore, in waters 300-400 metres deep.
Lukoil did not disclose any further details on the site, save that 2D seismic data had been col- lected there in the past.
e Moscow-based independent is already heavily invested in Kazakhstan, with shares in the giant Tengiz and Karachaganak oil and gas elds in the west of the country, along with the smaller Kumkol deposit. It also commands a stake in the Caspian Pipeline Consortium (CPC), which pumps oil from these projects to Russia’s Black Sea port of Novorossiysk.
Lukoil’s CEO Vagit Alekperov voiced interest in expanding o shore early last year, citing the Kazakh government’s recent overhaul of subsoil taxation. Upstream projects in Kazakhstan’s Cas- pian zone can now apply to pay an income-based tax in lieu of mineral extraction tax (MET), export duty and other levies. Depending on
production costs, this option can make develop- ments less vulnerable to lower oil prices.
Lukoil nalised an E&P contract to develop Kazakhstan’s o shore Zhenis area in early April in a 50:50 partnership with KMG. e company has pledged to invest as much as US$270 million on exploration at the site, including US$60 mil- lion on seismic work and the drilling of a well. Pending results, it could invest a further US$210 million on appraisal.
Zhenis holds 615 million toe in potential hydrocarbons, according to Kazakh estimates. It is situated 80 km from shore in water depths of between 75 and 100 metres.
Kazakhstan has handed out dozens of o - shore E&P contracts over the past two decades, although beyond the 2000 Kashagan discovery, exploration has by and large disappointed. But changes in subsoil and tax legislation, coupled with improved market conditions over the past two years, have reignited interest in the area.
Italy’s Eni, a lead shareholder in the Kashagan and Karachaganak projects, is in talks to exploit the o shore Abay block, which contains an esti- mated 2.8 billion barrels in potential oil reserves. Abay borders another area called Isatay that Eni agreed to develop in 2017.™
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