Kashagan oil field operating normally

Kashagan oil field operating normally

Work to bring onstream the giant Kashagan oil field in Kazakhstan is going normally and some crude has already been processed and put in storage, Kazakh Energy Minister Kanat Bozumbayev said.

Four wells were already producing at Kashagan with a total output of 90,000 barrels per day, Bozumbayev said.

The onshore facility Bolashak, which processes the Kashagan oil, is also operating normally, according to the minister.

“Yesterday, the first batch of the processed commercial oil was delivered from Bolashak to the tanks of KazTransOil. The project operator and its shareholders will announce the first export contract soon," the minister said.

The geological reserves of Kashagan are estimated at 4.8 billion metric tons of oil. The total oil reserves amount to 38 billion barrels; some 10 billion out of them are recoverable reserves. There are large natural gas reserves at the Kashagan field - over one trillion cubic meters.

The production at the Kashagan field started September 2013, but in October, it was ceased after a gas leak in one of the main pipelines. The analysis revealed numerous cracks in the pipeline, which needed to be completely replaced. The output was again suspended shortly after its launch because of technical problems with the gas pipelines.

The director of the Center for Studies of World Energy Markets at the RAS Institute of Energy Research, Vyacheslav Kulagin, told Vestnik Kavkaza how the launching of the Kashagan field will change the energy situation in the region.

"Increasing of oil production will allow Kazakhstan to increase export flows and trade with its neighbors, including Russia. At the same time, now the republic has to choose between crude oil exports or an oil refinery and an export of oil products. If we talk about the its impact on the world oil prices, it is not significant," the expert said.

"The EEU countries will have to consider Kashagan when forming a single market balance. The common market should have been formed by 2025. Now Kazakhstan received additional trade opportunities," Vyacheslav Kulagin added.

Kazakhstan, due to the full launch of Kashagan, will receive additional revenues from the sale of crude oil. "It will also have a positive impact on the country's economy in terms of both a job creation and a growth of the non-oil sector," he noted.

"Of course, it will be necessary to spent the money from Kashagan wisely. There is a need in income redistribution, so the energy industry can strengthen the economy, but will not become its basis," Vyacheslav Kulagin warned.

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