Production at the giant Kashagan oil field in Kazakhstan is unlikely to restart this summer as the companies involved in the consortium running the project are still awaiting a report on a gas leak that closed the field last October, people familiar with the project said Wednesday.
Resuming output is important so the companies, which include Exxon Mobil Corp.XOM -0.02% , Royal Dutch Shell RDSB.LN +0.13% PLC, France’s Total SAFP.FR +1.06% and Italy’s Eni ENI.MI +0.05% SpA, can start generating revenue to recoup some of the $50 billion they have already invested in Kashagan over the last 17 years.
It is also important for the Kazakh government, which had based its economic forecasts on revenue from Kashagan, where output was expected to ramp up to 370,000 barrels a day from 180,000 barrels a day initially.
“There’s no date for restart, but it certainly won’t be this summer,” said one person familiar with the project.
In February, Claudio Descalzi, chief operating officer of exploration and production at Eni, the company leading the development phase of the project, said the goal was to restart production at the field by July.
Production at the field was halted last October, only weeks after it had started up, when gas leaks were detected in a pipeline carrying natural gas from the offshore Caspian oil field to a processing plant onshore.
Since the shutdown, partners in the consortium developing Kashagan have been working to assess the cause of the cracking in the pipeline and the extent of the damage. Crucially, the partners need to know if the entire 55-mile length of gas pipeline, and possibly the oil line running alongside it, needs to be completely replaced.
However, a repair schedule can’t be formulated until the final report, which will contain the results of laboratory tests on samples of steel from the pipe and interpretation of data from pipeline inspections, is delivered to the consortium members.
The report initially had been expected at the end of last year, but has been pushed back month by month. The consortium has said it has taken longer than expected to analyze and interpret the data gathered from inspection of the gas and nearby oil pipelines.
Once the report is released, the companies in the consortium will need to consider the findings and then agree on repairs and a budget with the Kazakh government, making it less likely the issue can be resolved speedily, the people said.
Even if only small repairs are required, it will take time for the work to be completed and for inspections of the repairs to be signed off on, the person familiar with Kashagan said.
If the entire pipeline does need to be replaced, a Kashagan restart could be delayed until late next year, another person familiar with the project said.
