UPDATE 1-Kazakh PM hopes for Kashagan restart 'within months'

Fri Feb 28, 2014 7:39am EST

Related Topics

* No official estimate yet for restart

* PM says equipment failed

* Group preparing for possible equipment purchase

By Raushan Nurshayeva

ASTANA, Feb 28 (Reuters) - Kazakhstan's Prime Minister Serik Akhmetov said on Friday he hoped that the country's giant offshore oilfield Kashagan could restart output within months and produce 3 million tonnes of crude by the end of the year.

There has not yet been any official estimate for the restart of the $50-billion venture following an accident which halted it last October.

The world's biggest oil discovery in 35 years, production at Kashagan began in September but was stopped just weeks later after a gas leak was detected.

Repeated delays have infuriated the government, which has threatened to fine the multinational consortium operating the huge oil reservoir in the Caspian Sea.

"Kashagan is standing idle today. I hope that in the first half or early in the second half (of 2014) it will resume production," Akhmetov told a government meeting.

"And I hope that this year we will produce three million tonnes of oil," he said in a reference to Kashagan.

The government and members of the consortium expect to have results of steel tests and inspections next month which will allow them to estimate when output might resume.

"The most modern technologies were used to launch these mega-facilities," Akhmetov said.

"But you can see, how hard it is to launch this project, and the start of oil production showed that ... equipment, including pipelines, did not stand the test."

The North Caspian Operating Company (NCOC) developing the oilfield has said pipes fully meet the requirements of the NACE (National Association of Corrosion Engineers).

NCOC said last week that as a precautionary measure to save time it had begun a tender process for the potential purchase of pipeline joints "for various scenarios".

Akhmetov made no mention of any possible sanctions against the consortium for delayed output at Kashagan.

Exxon, Royal Dutch Shell, Total, Eni and Kazakh state oil company KazMunaiGas each hold a 16.81 percent stake in Kashagan.

Japan's Inpex has 7.56 percent, and China National Petroleum Corp (CNPC) acquired 8.33 percent in 2013 as ConocoPhillips COP.N exited.

The project aims to produce up to 1.66 million barrels a day - as much oil as OPEC member Angola - from a reserve almost as big as Brazil's.

Much of its infrastructure is built on artificial islands to avoid damage from pack ice in a shallow sea, which freezes five months a year in temperatures that drop below minus 30 degrees Celsius (-22 F).

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