Kashagan CPC Blend exports threatened by new delay

OREANDA-NEWS. September 22, 2016. The export of October seaborne CPC Blend cargoes of Kashagan crude may have to be delayed until November because crude treatment facilities have yet to be checked and audited.

According to the preliminary export programme, shareholders Eni, Shell and ExxonMobil are to export tanker cargoes totalling at least 660,000 bl of CPC Blend on 23-31 October from the Yuzhnaya Ozereevka terminal. But production on the field and crude treatment at the Bolashak onshore complex for further exports may require another four or five weeks.

"We believe that the wells [on Kashagan] may begin production this month, in around 10 days", oil minister Kanat Bozumbaev told reporters. According to him, another four weeks will be needed after this for treatment at the Bolashak crude treatment plant.

"We will see, monitor how they work, and only when we receive the necessary volumes of pure [treated] crude, we will be able to say that Kashagan started working", noted the minister, adding that the date of field commissioning is late October or early November. After being instructed to ensure the field restarted in October by the former prime minister, the oil ministry earlier gave 23 October as the restart date. Previously, it had pencilled in a more cautious December date.

Bozumbaev recalled that the facilities for the treatment of crude and gas delivered from Kashagan are seven or eight years old but their actual current capacity is only now being audited by contractor companies.

According to the preliminary export programme, Eni is to export some 55,000 bl of CPC Blend on 23-24 October, which will be added to a larger tanker cargo of crude produced by Karachaganak Petroleum Operating (KPO). Shell will make up a joint seaborne cargo with KPO on 29-30 October, and will supply around 200,000 bl of CPC Blend from Yuzhnaya Ozereevka. ExxonMobil plans to export some 400,000 bl of the crude grade on 30-31 October as a part of the tanker cargo that will include crude volumes produced by KMG, Maten and South-Oil.

NCOC plans to produce 90,000 b/d on the field over the first few months, and then to increase this production to 180,000 b/d later. Kashagan production is planned peak at 370,000 b/d by late 2017.

Production at the much-delayed and over-cost field in the Caspian Sea was stopped in October 2013, just a few weeks after its start, because of a gas leak in the pipeline network. A full-scale replacement of pipes was required as a result. That work is still being completed.

The NCOC consortium comprises Kazakhstan's state-owned, Italy's Eni, Shell, ExxonMobil and Total, which hold 16.81pc each, as well as Chinese state-owned CNPC with 8.33pc and Japanese upstream firm Inpex with 7.56pc..