Kashagan development costs cut by $1.8 bln in 2010
ALMATY. March 12 (Interfax) - The cost of developing the big Kashagan offshore oil field in Kazakhstan has been cut back $1.8 billion to $8.688 billion this year, said Maksat Idenov, managing director of national oil and gas company KazMunayGas.
"We recently finished discussing Kashagan's budget for 2010 with the project operator NCOC. We managed to reduce the $10.450-billion budget that was initially approved to $8.688 billion," Idenov told the Littera newspaper on Friday.
KazMunayGas President Kairgeldy Kabyldin said in January that this year's budget for the Kashagan project would be reduced by $3 billion.
In October last year Kabyldin said that the actual investments in the Kashagan field had come to $21 billion as compared to the total project budget of $38 billion.
The North Caspian Project for development of the Kashagan field was launched back in 1997 when the Kazakh government and AGIP KCO, the previous operator of the project, signed a production sharing agreement (PSA) for the period of 40 years.
The licensed area will also include the three oil-bearing structures Kalamkas, Aktoty, Kairan in addition to Kashagan. These four structures consist of 11 marine blocks, which occupy an area of about 5,600 square kilometers. The recoverable oil reserves at Kashagan are estimated at 7-9 billion barrels and the total oil in-place at 38 billion barrels.
Originally the shareholders had the following stakes in Agip KCO: Eni, Total, ExxonMobil, Royal Dutch/Shell 18.52% each, ConocoPhillips 9.26%, Inpex and KazMunayGas 8.33% each.
Agip KCO was to start the commercial production at the Kashagan field back in 2005. However, this deadline turned out to be unrealistic and in February 2004 Agip KCO and the Kazakh government agreed to postpone the commencement of commercial oil production at Kashagan until 2008.
In mid-summer 2007 Agip KCO again notified the Kazakh government of its decision to further postpone the commencement of commercial production till the second half of 2010. Agip also announced an increase in the expenditures from $57 billion to $136 billion.
In late June 2008 the Kazakh government and Agip KCO agreed that commercial production at the Kashagan field must begin no later than October 2013.
In January 2009 AGIP KCO partners agreed to increase KMG's share in the Kashagan project to 16.81%. The ownership structure of Agip KCO changed as follows: Shell, KazMunayGas, Eni, ExxonMobil and Total with a 16.81% stake each, ConocoPhillips with 8.4% and Inpex with 7.56%. The Kazakh government paid $1.7 billion for the acquisition.
In January 2009 the partners of the project agreed to create a new company to become the operator of the Kashagan project and the same month North Caspian Operating Company (NCOC) took over the Kashagan project from Agip KCO, all the shareholders still having the same stakes in the new operating company as follows: Shell, KazMunayGas, Eni, ExxonMobil, Total with a 16.81% stake each, ConocoPhillips 8.4% and Inpex 7.56%.