Oil production not to resume at Kashagan field in 2014

By: Aynur Jafarova

Oil production at Kazakhstan’s giant Kashagan field in the Caspian Sea will not be resumed in 2014.

The news was announced by the North Caspian Operating Company (NCOC), the operator of the North Caspian Sea Project (Kashagan field).

“The restart of production will depend on the results of the investigation which are due by the end of Q2, but production is not expected to resume in 2014,” the report said.

The current assessment, based on the investigation results to date, is that both oil and gas lines might have to be fully replaced, something which will be confirmed once the ongoing investigation is completed.

The operator is now developing a full replacement plan, which is expected to be finalized by mid-2014.

The plan includes tenders to select suppliers and contractors, deciding the material specifications, and incorporating the availability of key equipment.

The main goal is to develop an optimized plan to replace the lines while taking any potential for early production restart into account.

As a precautionary measure to avoid loss of time, the consortium has already initiated the tender process for the purchase of pipeline joints.

In a recent interview, Kazakh Economy and Budget Planning Minister Erbolat Dossayev said the $50-billion Kashagan project is likely to be delayed for two more years.

It was the first public admission by the government that the project will not only fail to produce oil this year, but may not also resume production till 2016.

With recoverable oil reserves estimated at 11 billion barrels, the Kashagan field is believed to be the largest oil field in the world after Prudo Bay in Alaska. Its natural gas reserves are also estimated at over 1 trillion cubic meters.

Oil production in the field started on September 11, 2013. However, operations had to be stopped on September 24 due to a gas leak in the onshore section of the gas pipeline running from Island D to the Bolashak onshore processing facility.

The Department of Emergency Situations was immediately briefed on the regulations. Production was resumed, but stopped again on October 9 after the detection of a gas leak.