LONDON SOUTH EAST: Thursday, 13th Feb 2014
Costs at the Kashagan site have spiralled in recent years and it has taken 13 years since the beginning of development to reach this point. Once oil starts to flow at the site, Shell, which owns 16.81% of the Kashagan development, is expected to take over management of production operations, along with Kazakhstani state company KazMunaiGas JSC. Shell also will take on planning, development and construction of phase 2 of the project’s offshore facilities, which is designed to bring it up to full production.
After 11 years and $39 billion of investment, Exxon Mobil Corp., Royal Dutch Shell Plc (RDSA) and their partners have yet to sell a drop of oil from what was touted as the worlds biggest discovery in four decades.
Campbell Keir, director of Royal Dutch Shell in Kazakhstan, says the offshore Kashagan field is one of the most technically challenging fields in the industry, which may be the future of the energy sector.
A recent settlement decided that Total will provide the first managing director of the newly established North Caspian Operating Company. The decision ended more than a year of dispute between the project's international oil company partners - most notably ExxonMobil of the US, and Total, Royal Dutch Shell and Eni of Europe - and the Kazakh government.
The project also has more partners than most ventures of its kind: besides ENI, there is Royal Dutch Shell PLC, Exxon Mobil Corp.,Total SA, ConocoPhillips, Inpex Holdings Inc. of Japan and KazMunaiGas. Strained relations between the partners have added to the project's complexity.
Royal Dutch Shell Kazakhstan said that KazMunaiGas, the state oil company, would create a joint venture with Royal Dutch Shell, the Anglo-Dutch oil and gas group, to handle the production segment of the Kashagan oilfield.
Royal Dutch Shell was on the verge of sealing a deal with Kazakhstan yesterday that could lead to taking joint control of one of the world's biggest oilfields.