A PHP Error was encountered

Severity: Warning

Message: imagejpeg(./assets/captcha/1574309528.454.jpg): failed to open stream: Disk quota exceeded

Filename: libraries/antispam.php

Line Number: 144

A PHP Error was encountered

Severity: Warning

Message: Cannot modify header information - headers already sent by (output started at /home/iiksscom/public_html/en/system/core/Exceptions.php:185)

Filename: libraries/Session.php

Line Number: 675

Kashagan to expand and extend first production stage

Kashagan to expand and extend first production stage Investment

ASTANA – The Kashagan development project operator – North Caspian Operating Company (NCOC) – is planning to substantially expand and extend the first production stage – the Experimental Programme (EP). The operator company has developed an AEP project – Additional Experimental Programme. The new project will replace the EP that failed two years ago. The government of Kazakhstan should decide before the start of September whether to implement it or not.

No reason to panic for those who think the renewal of production at Kashagan will be delayed yet again. No! It remains the same – early December 2016.

If the government of Kazakhstan approves the changes, the AEP project should yield in 2020 (rather than in 2018) a production volume of 370,000 barrels a year (47,100 barrels a day) or slightly over 24 million tonnes of oil a year. Five years later, in 2025, with the putting into operation of additional raw gas compressors, the AEP should achieve the first red level of production – 450,000 barrels a year.

So, what does the AEP involve? It provides for changes to the process flow, extension of the total duration of the pilot commercial development, and extension of time for achieving the first base level of production at the contractual volume of 450,000 barrels a day.

That last milestone is now moved to 2025. It is approximately 15 years later that had been projected back in 1998, when the Production Sharing Agreement for the Northern Caspian Project signed. Accordingly, it can be said with complete certainty today that the project will not achieve return on investment under the current terms of the contact that continues till 2041, even at the then high oil price of $105 per barrel.

The current oil prices at $35-$37 make a huge hole in the budgets of the foreign investors and of the national company KazMunaiGas, creating a decades-long headache for them; unless, of course, the situation in the world markets changes radically, and the price for oil reaches $220–300 per barrel.

The project’s capital expenses have reached almost $45 billion, making the members of the project hostages of the investment spent. Most importantly, to cover at least a part of the record costs ever seen in the world’s history of investment in a single oil project, more costs have to be incurred.

The development of the Kashagan field is complicated by its specific location on the Caspian Sea shelf as well as by the abnormally high formation pressure in the pay, and the high hydrogen sulfide content in the oil produced. All these peculiarities necessitate an extensive work to prepare the field for a full-scale development. Many of those issues should be resolved during the AEP.

In essence, the AEP consists of several key steps. The first step is for the project operator – NCOC – to expand the project’s production zone in the southwest direction, i.e. to expand the work site. It is planned to drill two more wells there.

The total well stock at Kashagan is currently 52 wells. Out of those 52 wells, 42 are in the Experimental Programme zone the Kashagan project and include 40 planned wells, one exploration well, and one drill cutting re-injection well. The two new wells will be drilled in a completely new zone that has not been explored ether in the exploration stage or in the pilot commercial development stage.

These additional wells should provide new necessary information on the physical and dynamic properties of the field’s reservoir. As a special solution to an earlier serious omission, this part of the Additional Experimental Programme deserves a special attention. It is the necessity to do the additional drilling that forces NCOC to extend the AEP by two years, from three years to five years, and to complete the project in 2020 instead of 2018. Consequently, each additional year automatically increases the running costs.

It is hard to predict what decision the official Astana will make, as the AEP contains many aspects that are unpleasant for the government. Finding itself in a deep financial crisis, the national company KasMunaiGas had to sell half of its share in the project to Samruk-Kazyna and the National Bank. To finance the transaction, $4.7 billion were withdrawn from the National Fund.

The government had resorted to that “direct financial transaction” in order to preserve the 16.67% interest in the strategically important for Kazakhstan Kashagan project. The extension of the AEP by two years and the other investor changes force the company to incur new substantial additional costs and remove the profits further.

News Image Gallery

Tags :

Kashagan to expand and extend first production stage Kashagan expand extend production stage the caspian sea map caspian sea caspian sea lake caspian sea river caspian sea monster caspian sea oil caspian sea iran caspian sea countries caspian sea iran Caspian Sea fish Photo of the Caspian Sea Caspian Sea map Caspian Sea Caspian Sea Caspian Sea Isle depth of the Caspian Sea Caspian Sea sturgeon of the Caspian Sea Caspian Sea Khezer_Shahr Caspian Sea Caspian oil Bandar Amirabad Port Anzali Mazandaran Gilan, Golestan Babolsar Surrey you Tourist Attraction North Country Dodangeh Chahardangeh Caspian the Khazars the people of the Khazars people Caspian Caspian Sea Sea of Qazvin Khazarabad Surf coast Caspian Sea legal norms Caspian Caspian environment pollution of the Caspian Sea Caspian oil gas of the Caspian Sea Caspian Caspian Sea issues the legal system of the Caspian Sea Iran's share in Caspian legal aspects of the regime of the Caspian Sea environment of the Caspian Sea the importance and status of the Caspian Sea Caspian to the Persian Gulf connection National Institute of Oceanography features of the Caspian Sea Caspian Shipping Company Caspian Sea level Iran Russia Kazakhstan Azerbaijan, Turkmenistan fishing in the Caspian Sea Caspian Sea weather weather Caspian Sea Caspian Sea News marine transportation in the Caspian Sea region the Iranian islands in the Caspian Sea the scaffolding factory and shipyard Caspian ecological Institute of Caspian Sea Caspian Sea Shells in nitrate and phosphate important rivers Caspian Sea basin mammal Caspian Sea Caspian oil Company transfer Caspian Sea water Babylon Amol Attraction North northern tourist areas the forests of the north spectacular Photos of Mazandaran see Mazandaran forests forests of Mazandaran images Falls river forest Institute for Caspian Sea basin Caspian Sea level fluctuations Black gold caviar stellate sturgeon Hotels tourism Tourist

Comments

Send Comment

Tags:

Kashagan to expand and extend first production stage Kashagan expand extend production stage the caspian sea map caspian sea caspian sea lake caspian sea river caspian sea monster caspian sea oil caspian sea iran caspian sea countries caspian sea iran Caspian Sea fish Photo of the Caspian Sea Caspian Sea map Caspian Sea Caspian Sea Caspian Sea Isle depth of the Caspian Sea Caspian Sea sturgeon of the Caspian Sea Caspian Sea Khezer_Shahr Caspian Sea Caspian oil Bandar Amirabad Port Anzali Mazandaran Gilan, Golestan Babolsar Surrey you Tourist Attraction North Country Dodangeh Chahardangeh Caspian the Khazars the people of the Khazars people Caspian Caspian Sea Sea of Qazvin Khazarabad Surf coast Caspian Sea legal norms Caspian Caspian environment pollution of the Caspian Sea Caspian oil gas of the Caspian Sea Caspian Caspian Sea issues the legal system of the Caspian Sea Iran's share in Caspian legal aspects of the regime of the Caspian Sea environment of the Caspian Sea the importance and status of the Caspian Sea Caspian to the Persian Gulf connection National Institute of Oceanography features of the Caspian Sea Caspian Shipping Company Caspian Sea level Iran Russia Kazakhstan Azerbaijan, Turkmenistan fishing in the Caspian Sea Caspian Sea weather weather Caspian Sea Caspian Sea News marine transportation in the Caspian Sea region the Iranian islands in the Caspian Sea the scaffolding factory and shipyard Caspian ecological Institute of Caspian Sea Caspian Sea Shells in nitrate and phosphate important rivers Caspian Sea basin mammal Caspian Sea Caspian oil Company transfer Caspian Sea water Babylon Amol Attraction North northern tourist areas the forests of the north spectacular Photos of Mazandaran see Mazandaran forests forests of Mazandaran images Falls river forest Institute for Caspian Sea basin Caspian Sea level fluctuations Black gold caviar stellate sturgeon Hotels tourism Tourist