Kashagan, a vast oil field in the Caspian Sea, sent its first crude for export after about 16 years in development and more than $50 billion of investments.
The venture loaded 26,500 metric tons of crude for export into the country’s pipelines, Kazakhstan’s Energy Ministry said in an e-mailed statement Friday. Of that, 7,700 tons was sent to the Caspian Pipeline Consortium. Reaching stable production will take “some time” as commissioning work continues both offshore and onshore, the ministry said.
The project has been plagued by multiple delays and cost overruns. A 2008 budget estimate of $38 billion jumped to $53 billion by the end of last year as the partners replaced undersea links after sulfurous gas corroded and cracked the pipes after a brief startup in 2013. The crude from Kashagan is reaching an already saturated market, with prices at less than half the level of three years ago. Expectations for the field’s exports even prompted OPEC to flip supply predictions for next year.
“Restarting production even in this low oil price environment is good because it means beginning to see some returns on that massive investment,” Andrew Neff, Paris-based principal analyst at IHS Energy, said by e-mail. “The real payoff will be phase two,” which has the potential to increase output to 1 million barrels a day, he said.
North Caspian Operating Co.,
which took over running of the field from Eni SpA in 2009, said it’s working to gradually increase production capacity to a target level of 370,000 barrels a day by the end of 2017.
UK consulting firm Wood Mackenzie Ltd. forecasts only about 154,000 barrels a day from the field on average next year.
Shares in Eni rose 2.4 percent to 13.48 euros Friday at 1.31 p.m. in Milan. The Kazakh currency advanced 0.3 percent to 330.45 tenge per dollar in Almaty, the strongest since June.
Development of the offshore deposit, initially due to come on stream more than a decade ago, was prolonged by the need to build remote
islands to support drilling equipment. Although production finally got going in September 2013, it was halted just weeks later because of the pipeline defects.
The global oil glut has seen crude prices sink to half their 2014
levels. Non-OPEC supply will grow
by 240,000 barrels a day next year, the Organization of Petroleum Exporting Countries said Oct. 12. A month earlier it predicted a 200,000-barrel gain, and a month before that, a decline.
The ownership of Kashagan has shifted over the years. Kazakhstan has expanded its stake and currently holds 16.88 percent; Eni, Total SA, Royal Dutch Shell Plc and Exxon Mobil Corp. each own hold 16.81 percent. China National Petroleum Corp. has 8.33 percent and Japan’s Inpex Corp. has 7.56 percent.