August 10, 2012 / 3:00 PM / 7 years ago

Kashagan's big oil coming to market in mid-2013 -sources

* Large-scale exports unlikely to begin before mid-2013

* Oil to flow to Black Sea, Mediterranean ports

By Alla Afanasyeva

MOSCOW, Aug 10 (Reuters) - Kazakhstan’s Kashagan oil field is set to make its first deliveries to markets in 2013 after years of delays, with large-scale exports expected from the middle of the year, industry sources told Reuters.

The start-up of the field, one of the world’s largest, has been delayed since 2005 due to cost overruns and disputes with authorities over taxes.

Production rates are initially expected to be very modest after the field starts operations at the end of this year or early next.

Some oil will flow through existing pipelines via Russia to Black Sea ports, some will be transported by Kazakhstan’s shipping firm Kazmortransflot via the Caspian Sea also for delivery to Black Sea or Mediterranean ports.

“Kazmortransflot is in discussion over a contract to ship oil from Kashagan in 2013... We are talking about 1-3 million tonnes out of the overall output of 3-7 million tonnes,” a shipping source told Reuters.

The consortium that controls the field is aiming to produce around 300,000 barrels per day in the initial test phase of operation at the field, eventually increasing to more than 1 million barrels per day in 2018-2019.

If the field reaches output of 7 million tonnes next year it would be equal to 140,000 bpd, enough to supply a mid-sized European refinery.

“They will start producing and stocking up oil, while exports are seen not earlier than June-July (2013),” the shipping source said.

The field is jointly controlled by state-run Kazmunaigas and six international oil companies. Kazmunaigas, Eni, ExxonMobil, Royal Dutch Shell and France’s Total own stakes of around 16.8 percent each.

ConocoPhillips owns 8.40 percent, and Japan’s Inpex 7.56 percent. Kazmunaigas entered the project in 2005 and later doubled its stake to 16.81 percent.

“In December there will be a ceremony to produce the first oil, but they will probably show the oil to the management and production will start in the middle of next year,” a Kazakh industry source said.

Kazakhstan, which holds 3 percent of the world’s recoverable oil reserves, plans to increase crude output by more than 20 percent to 100 million tonnes by 2015. Kashagan, discovered in 2000, will contribute much of this additional volume.

All the Kashagan shareholders are responsible for securing export routes for their crude.

“The main routes for Kashagan are likely to be CPC and BTC,” a Kazmunaigas source said referring to a pipeline via Russia and a pipeline from Azerbaijan to the Turkish Mediterranean coast.

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