Energy giants look to longer term at Kazakh field

Mon Oct 22, 2012 6:29am EDT
 
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By Robin Paxton

KASHAGAN OILFIELD, Kazakhstan (Reuters) - It has taken $46 billion over 12 years to bring Kashagan, the biggest world oilfield discovery since 1968, to the brink of production.

But some in the seven-member development consortium are wondering whether they will be able to recoup their investment in the western Kazakh oil field before the current Production Sharing Agreement expires in 2041.

They hope the departure of one partner, ConocoPhillips, will lead to a reshuffle that will give them greater operating control and extend the PSA beyond 2041, long enough to guarantee returns from the larger second phase of development.

"We've developed only a small fraction of this gigantic field. This is a lifetime development," said Alain Guenot, planning director for North Caspian Operating Co, or NCOC, the consortium that unites the seven investors.

Up to 12 billion barrels of oil, enough to supply the world for four months, lie in wait beneath Kazakhstan's portion of the Caspian Sea, to be extracted by the consortium that includes ExxonMobil (XOM.N: Quote), Shell (RDSa.L: Quote) and Eni (ENI.MI: Quote).

ConocoPhillips, which is disposing of billions of dollars' worth of overseas assets to reduce debt and increase its exploration and dividend budgets, wants to sell its 8.4 percent stake, Oil and Gas Minister Sauat Mynbayev has said.

The Houston-based company has not confirmed this.

STATE OPTION   Continued...

 
A drill rig under construction is seen at an offshore island in the northern Caspian Sea, part of the Kashagan oilfield, October 11, 2012. Up to 12 billion barrels of oil, enough to supply the world for four months, lie in wait beneath Kazakhstan's portion of the Caspian Sea, to be extracted by the consortium that includes ExxonMobil, Shell and Eni. But some in the seven-member development consortium are wondering whether they will be able to recoup their investment in the western Kazakh oil field before the current Production Sharing Agreement expires in 2041. REUTERS/Robin Paxton