December 7, 2011 / 1:46 PM / in 7 years

Kazakh dep oil min sees Kashagan Phase 2 by 2019

DOHA, Dec 7 (Reuters) - Kazakhstan expects the second phase of its giant Kashagan oilfield to be launched by 2018 or 2019, with first oil now expected in June 2013, the vice oil and gas minister said on Wednesday.

The start of the Kashagan project in the Caspian Sea, the biggest oil discovery since the 1960s, has repeatedly been delayed while costs have soared.

Kazakh Oil and Gas Minister Sauat Mynbayev said in January the government might not approve the second phase due to escalating costs, although he said in October that disagreements over these costs could be overcome through negotiations.

Deputy Oil and Gas Minister Lyazzat Kiinov said he still expected the second phase of the project to go ahead, which would more than double Kashagan’s production to around 1 million barrels a day (bpd).

“We still think we will complete the second phase by 2018 or 2019,” Kiinov told the World Petroleum Congress in Doha. He said the government had done nothing to delay the project and was only discussing cost-cutting measures with consortium partners.

“The government promises that we are not going to revise any law or any contract that is already signed, and we are not about to interfere,” he said. “Everybody and every partner will continue working according to the documents we have signed.”

Members of the consortium that operates Kashagan include Italy’s Eni, Royal Dutch Shell, U.S. majors ConocoPhillips and ExxonMobil, France’s Total , Japan’s Inpex and Kazakh state oil and gas company KazMunaiGas.

Consortium members and the government have set a target of between December 2012 and June 2013 for first production from the complex field.

Kiinov said first production was now expected in June 2013, indicating the back end of the previously stated period.

“Beginning of production will start in June 2013. It’s the latest term that we have established. 2013,” the vice minister said via a translator.

Mynbayev has previously stated Phase I of the project should produce 370,000 bpd, with the possibility of increasing this to 450,000 bpd.

KARACHAGANAK

Kazakhstan, Central Asia’s largest economy, has become more assertive over its natural resources in recent years and has sought to revise some agreements with foreign energy companies struck when it lacked cash after the Soviet Union’s demise.

The government has long expressed a desire to buy into the international consortium that operates the Karachaganak field in northwest Kazakhstan, which contributes 49 percent of the gas produced by the country and 18 percent of its current crude oil production.

The government is close to deal to buy a 10 percent stake in the consortium run by BG Group and Eni.

“We are having talks and everything is positive, so we hope to,” he told reporters on the sidelines of the conference when asked whether the government was poised to seal the deal.

The state’s proposed move into Karachaganak echoes its strategy on the Kashagan oilfield. KazMunaiGas entered that project in 2005 and later doubled its stake to 16.8 percent.

The government has brought several cases against the operators of Karachaganak, accusing them of overstating costs and violating tax and ecological laws.

BG Group and ENI each own a 32.5 percent stake in the consortium. U.S. major Chevron and Russia’s LUKOIL are also partners. (Editing by William Hardy)

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