* Possible cracks offshore may take much longer to fix
* Offshore test results for cracks expected in late May
* Kazakh government running out of patience
(Releads, adds government official)
By Raushan Nurshayeva
ASTANA, April 7 Output at Kazakhstan's huge
Kashagan oilfield may fail to restart this year if test results
expected in May show cracks in the offshore part of its pipeline
network, Kazakh Oil and Gas Minister Uzakbai Karabalin said on
An inspection of the pipelines is under way and "suspicions
have emerged" of microcracks in those laid in the Caspian Sea,
Karabalin told reporters.
Kazakhstan, Central Asia's largest economy and the
second-largest post-Soviet oil producer after Russia, is pinning
hopes for future prosperity on Kashagan, whose recoverable
reserves are estimated at 9 billion to 13 billion barrels of
Production at the offshore deposit, the world's biggest oil
find in 35 years, started in September but halted in early
October after the detection of gas leaks in the $50 billion
project's pipeline network.
Asked when output could be restarted, Karabalin said: "It's
impossible to say anything right now ... because suspicions have
emerged that there may be microcracks in the offshore stretch of
the pipeline as well."
He said closer checks of "possible risks offshore" were
hampered by ice melting in the shallow Caspian Sea. These checks
must be completed in late May, he said.
"Then it will be clear whether there are cracks in the
offshore part of the pipeline network. If they really are there,
this would lengthen the duration of previously planned work.
"Contractors have various scenarios - the easiest one is if
it's just onshore. In this case, this can be mended and then,
probably, it (output) will be this year."
However, if cracks are confirmed in offshore pipelines, "we
will have to wait for shipping to resume and lay pipelines
then", Karabalin said.
"Of course, this would mean a far longer timespan. Now we
await a final decision pending the results of the inspection."
DELAYS TRY GOVERNMENT'S PATIENCE
Delayed output at Kashagan has unsettled Kazakh authorities,
which have already sued the consortium operating the oilfield
for 134 billion tenge ($737 million) over ecological damage.
"This is a very complex project, which I believe will start
working in the end. But the question is: how much it is going to
cost and who is going to pay for these flaws and mistakes," said
a Kazakh government official who declined to be identified.
The consortium said last month it would challenge the fine,
potentially raising tensions with the government, which in
recent years has become more assertive in dealing with foreign
investors and has used legal action as leverage to increase
participation in some energy projects.
The multinational group has identified stress cracking due
to sulphur-laden gases as "the root cause of the pipeline
issues" at Kashagan.
Much of Kashagan is built on artificial islands to avoid
damage from pack ice in the Caspian, which freezes for five
months a year in temperatures that drop below minus 30 Celsius
The North Caspian Operating Company (NCOC) consortium, led
by Exxon Mobil, Royal Dutch Shell, Total
, Eni and Kazakh state oil firm KazMunaiGas
, had to achieve a "commercial output" level of 75,000
barrels per day in October to meet its contractual obligations.
An NCOC spokesman has said the group was in the "ramp-up
phase" and achieved this level, but did not sustain it long
enough to count it officially as "commercial output" before
NCOC also includes Japan's Inpex with 7.56 percent
and China National Petroleum Corp (CNPC) with 8.33
percent, which it bought from ConocoPhillips last year.
During Kashagan's development, NCOC had originally planned
to increase output gradually to 370,000 barrels per day in the
second stage from 180,000 bpd in the first stage in 2013-14.
(Writing by Dmitry Solovyov; Additional reporting by Mariya
Gordeyeva in Aalmaty; Editing by Jason Neely and Dale Hudson)