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Kashagan crude oil ready for exports

Field off the coast of Kazakhastan is one of the world's largest, but plagued by tough operating environment.

By Daniel J. Graeber
Kashagan crude oil ready for exports
Crude oil from the giant Kashagan oil field off the coast of Kazakhstan has been processed and is ready for exports. Photo provided to UPI by the North Caspian Operating Company from its library.

ASTANA, Kazakhstan, Oct. 14 (UPI) -- The first batch of crude oil from the giant Kashagan oil field off the coast of Kazakhstan has been processed and is destined for exports, an operator said.

"North Caspian project operator, the North Caspian Operating Co., announces that, as an intermediate objective in its start-up and commissioning activities, it has commenced production from the Kashagan Phase 1 offshore project, and the onshore processing plant has dispatched the first batch of crude oil destined for export," the company said in a statement.

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Low crude oil prices, about 50 percent less than when Kazakhstan's economy was more robust two years ago, and contractions in trading partners China and Russia has left the Central Asian country facing a long road to recovery.

A June report from the World Bank said the economic decline in Kazakhstan has been broad-based, with gross domestic product declining from 4.1 percent in 2014 to 1.2 percent in 2015. During the first five months of this year, the bank said the economy contracted another 0.2 percent.

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Part of Kazakhstan's oil production gains are expected to come from the Kashagan oil field in the Caspian Sea, one of the largest in the world. Production at Kashagan, which holds an estimated 16 billion barrels of oil, was halted in October 2013, less than a month after it started, when a pipeline associated with the field cracked open.

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Kazakh Energy Minister Kanat Bozumbayev hinted earlier this year that some of the wells at the offshore field would be opening up in the latter half of October.

A year ago, the government said total crude oil output would reach 630 million barrels in 2017 and 760 million barrels in 2020 thanks in part to an expansion program planned for the Tengiz field, positioned in the wetlands along the shores of the Caspian Sea.

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In 2014, when crude oil prices were above $100 per barrel, Kazakhstan produced around 590 million barrels of oil.

The NCOC said work is under way to "safely and gradually" increase Kashagan production to the target capacity of 370,000 bpd by the end of next year.

No information was offered about the target destination for exports.

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