Last week Sauat Mynbayev, President of KazMunaiGas, said that such a complex and capital-intensive project as Kashagan (it will be launched only after two years with the most favorable concourse of circumstances) could be recouped with the oil price of about $100 per barrel. Right now the price is almost twice less.
However, it looks like even with the oil price of $100 per barrel the profitability of the project could appear to be negative. In November 2012 CNN Money called Kashagan the most expensive field in the world.
It is hard to evaluate cost price of Kashagan oil today: it is hard enough to find accurate information about even the acting fields. Kazakhstan Vice Minister of Energy Uzakbay Karabalin said that average cost rice of 1 barrel of oil extracted in Kazakhstan is about $50.00. Kashagan oil will cost much high (at least twice higher). This is also an offshore field.
One should also take into account the costs “added” to each barrel of oil extracted on the field. They include not only costs for replacement of the pipelines “worn out” by the sulphides (about $2 billion), but also the budget for development of the field that has increased by 8 times against the previous sum. Today it is estimated at $139 billion.
With such costs the Caspian Sea shelf will hardly bring Kazakhstan the bonuses, which the government optimistically counted on many years ago when started work on the Kashagan project.
Therefore, it makes sense to speak about the term of recoupment of the costs borne by the consortium working on the basis of the production sharing agreement (PSA), rather than profitability of the project. With the current oil prices, the country will not receive profit for decades and it will have to settle accounts with the foreign companies, reported www.Oilnews.kz.
