Kashagan profitability could be assessed not earlier than 2017, Shkolnik

ASTANA. KAZINFORM - The profitability of Kashagan oil field could be correctly assessed not earlier than in 2017, Kazakh Energy Minister Vladimir Shkolnik said.

The noted that the replacement of the affected pipelines is underway at the field and this work is scheduled to be completed in Dec. 2016. Then the project operator should launch commercial oil production at the field.

"It will be possible to say if the field profitable or not at that time. It depends on oil prices two years from now and later," said Shkolnik.

Meanwhile he noted that oil prime cost at large fields in Kazakhstan, such as Karachaganak and Tengiz, is the lowest in the country, Kazinform refers to Trend.az.

"I am sure that Kashagan oil prime cost will be low too," the minister said.

Earlier an expert of the Institute of Political Solutions of Kazakhstan, Sergey Smirnov told Trend that oil production at Kashagan field would be unprofitable if the oil prices remain at the current level.

"Given the difficult geological conditions at the field, the price of the Kashagan oil will clearly be above $50, given the costs that have already been realized. Therefore, at $50-$60 per barrel, the production will be unprofitable," said Smirnov.

The world oil prices dropped from almost $110 per barrel to below $50 in recent months.

Kashagan is a large oil and gas field in Kazakhstan, located in the north of the Caspian Sea. 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 Sept. 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 replacement was said to take at least two years.

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