Shell
gives go-ahead for Kashagan, one of the world’s largest oil
projects
Posted: 25 February 2004
Shell Kazakhstan Development BV has taken final investment decision
for Kashagan, a giant oil field in Kazakhstan. Separately the Kazakh
petroleum authority Kazmunaygaz and the North Caspian Sea production
sharing agreement consortium today approved the development plan
for the project.
The Kashagan field was discovered in 2000 and is estimated to have
38 billion barrels of oil in place, making it one of the largest
discoveries in 30 years. Shell holds 16.67 per cent of the project,
a stake which will rise to 20.37 per cent upon completion of the
previously announced purchase of part of British Gas’ shareholding.
Walter van de Vijver, Chief Executive Officer of Shell Exploration
and Production, said today: “Kashagan is a huge project that
will be delivering value to shareholders for decades to come. It
is also an important part of our strategic vision for the region.
We see the Caspian and the broader Commonwealth of Independent States
as a future heartland for Shell. We are making good progress building
that heartland. Reaching final investment decision on Kashagan is
the third major step we have taken in the past year, following similar
decisions for the Sakhalin and Salym projects in Russia.”
Ron van den Berg, Chief Executive Officer of Shell Exploration
and Production in the Middle East, Russia and Commonwealth of Independent
States, added: “Today’s green light for Kashagan is
testament to our confidence in the business climate in Kazakhstan.
We welcome progress in improving the legal and regulatory system,
and we are also pleased that the government has successfully maintained
the stability of the Kashagan production sharing agreement.”
First oil from Kashagan is currently targeted for 2008. Initial
production is expected to be 75,000 barrels of oil per day, rising
to an estimated 450,000 barrels per day during the first phase of
development. Subsequent phases are expected to result in full field
production of an estimated 1.2 million barrels per day.
To enhance oil recovery and reduce sulphur handling, the consortium
plans to inject produced gas back into the reservoir. Depending
on the success of gas re-injection, ultimate recovery from Kashagan
is estimated to be up to 13 billion barrels of oil. The total capital
investment for full field development is expected to be about $29
billion.
Kashagan reserves were amongst the volumes recategorised on January
9 2004. The booking of Kashagan volumes is expected to commence
in 2004, following the final investment decision announced today.
Partners in the North Caspian Sea production sharing agreement
consortium and their current shareholdings (prior to the completion
of the exit of British Gas) are: Shell (16.67 per cent), Agip Caspian
Sea B.V. (16.67 per cent), British Gas (16.67 per cent), ExxonMobil
(16.67 per cent), Total (16.67 per cent), ConocoPhillips (8.33 per
cent) and Inpex (8.33 per cent). AgipKCO is the operator on behalf
of the Consortium.
For more information see www.shell.com
Posted by Richard Price,
Editor Pipeline Magazine
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