All 40 wells planned during Kashagan’s first production phase have been drilled and hence drilling operations at the field in Kazakhstan’s Atyrau region have for the moment ceased, Managing Director of North Caspian Operating Company (NCOC) Bruno Jardin said last week. Mr. Jardin specified that 8 of the 40 wells were drilled on the artificial man-made offshore island-A, 12 on island-D and another 20 on EPC 2,3 and 4. Furthermore, he divulged the operator’s intention to start developing a set of new oil fields both within and outside its contract territory, most probably in parallel with the future stages of Kashagan, now that output from the ‘’giant’’ has exceeded 300,000bbl/d, with hopes of yielding up to 370,000bbl/d (i.e. achieving full design capacity) in the course of 2018.
In particular, NCOC mulls further oil and gas activities at Aktote and Kairan fields, lying in the east of Kashagan, closer to the western coast of Kazakhstan. The consortium, comprised of KazMunaiGas, Eni, Shell, ExxonMobil, Total, CNPC and Inpex, also eyes joint development of the adjacent Kalamkas-sea (operated by NCOC) and Kazhar (operated by Caspi Meruerty Operating Company -CMOC) structures. Referring to the last two deposits, Mr. Jardin made clear that NCOC has identified certain cost-saving options that ensure the economic viability of the project. Under the North Caspian Sea Production Sharing Agreement (NCSPSA), dating back to 1997, NCOC holds rights to 11 offshore blocks, including Kashagan, Aktote, Kairan and Kalamkas fields. Having delivered the concept and pre-FEED for the Kalamkas-Khazar co-development since early 2017, it seems that the company is ready to expand its asset portfolio in Kazakhstan, taking advantage of the fact that two of its shareholders, namely Shell and KazMunaiGas, equally participate in CMOC’s so-called Pearls project, alongside Oman Oil Company. Kazhar forms a substantial part of Pearls project and, although physically located in Kashagan’s contract area, its exploration and production rights have been granted to CMOC (Shell: 55%, KazMunaiGas: 25%, Oman Pearls Company: 20%) under a 2005 production sharing agreement.
Despite it primarily inducing Kazakhstan’s ill compliance with the OPEC cuts, new announcements on planned drillings near Kashagan come amid a noticeable rise in oil prices since January 2018, fueled by imminent trade wars, high geopolitical anxiety and a slightly decreasing US rig count. Therefore, until (and if) the latest crude rally is again put on pause, the upstream business could be thought of as the main contributor to energy majors’ earnings. And NCOC investors are, of course, not an exception.
Available online at: http://www.caspianpolicy.org/energy/caspian-energy-insight-april-4-2018/#5