MOSCOW (Reuters) - Two new Caspian Sea oil fields are due by the end of this year to add significant volumes of crude to a world market already in glut, possibly depressing prices just as producers including Russia talk about reviving them.
According to industry sources and a loading schedule seen by Reuters, the Kashagan field in Kazakhstan’s sector and Lukoil’s Filanovsky field in the Russian sector - both of which are scheduled to come on stream soon - will together produce at least 200,000 barrels of crude per day (bpd) by the end of 2016.
By the end of next year, according to targets previously announced by the fields’ operators, Kashagan and Filanovsky will between them produce about 500,000 bpd, equivalent to about 0.5 percent of global production.
Faced with world oil prices languishing at around $50 per barrel, Saudi Arabia and Russia - the world’s two biggest crude exporters - agreed on Monday to cooperate in world oil markets. Though they will not act immediately, they said they could limit output in the future.
The agreement pushed up prices on expectations that exporters would work together to tackle the glut. However, on Thursday Brent crude LCOc1 was trading around $48.50.
The Caspian crude will come on top of extra oil from Iran, which is working to raise its exports back to around 2.4 million bpd, the amount it used to sell before sanctions aimed at curbing its nuclear programme were imposed. International sanctions were lifted earlier this year on implementation of a deal between Tehran and world powers.
Production at the long-delayed and hugely expensive Kashagan offshore project - the world’s biggest oil find in 35 years - will start in October this year, according to industry sources who have seen Kazakh Energy Ministry documents on the field.
Output will initially be 75,000 bpd in October, rising to between 150,000 and 180,000 in the November-December period of this year, the sources told Reuters, citing the ministry documents.
Asked about the plan, a spokeswoman for North Caspian Oil Company, the Kashagan operator, declined to give a breakdown of production figures for this year.
The Kashagan consortium comprises China National Petroleum Corp., Exxon Mobil of the United States, Italy’s Eni, Anglo-Dutch Royal Dutch Shell, Total of France, Inpex of Japan and Kazakh firm KazMunaiGas.
The project began producing oil in September 2013 but stopped a few weeks later after gas leaks in its pipelines.
Filanovsky will export around 50,000 bpd of CPC blend, a light Caspian crude, between October and December this year, according to a loading schedule, a copy of which was obtained by Reuters.
Representatives of Lukoil confirmed that production would start this year, but declined to give figures for volumes.
The planned new Caspian production from the two members of the Commonwealth of Independent States (CIS), which groups most ex-Soviet countries, shows how difficult it will be for exporters to curb output, especially when commercial interests outweigh the wishes of government officials.
The Kashagan field is five years behind schedule and costs have rocketed. By the end of 2015, the amount invested in its first phase had reached $55 billion, according to the project’s operator.
“While Russia is lulling the world with stories about a freeze in production in order to stabilise prices, on its territory and in the countries of the CIS new fields are continuing to come on stream and it doesn’t look like anyone can do anything to stop it,” said an industry source who spoke on condition of anonymity.
Editing by Christian Lowe and David Stamp