ASTANA, Jan 23 (Interfax). Kazakhstan's Oil and Gas Ministry does not agree with a proposal by the shareholders in North Caspian Operating Company (NCOC), the operator of the North-Caspian project, to increase the budget for Phase-1 of the development of the Kashagan field by $7 billion.
"Yes, the proposal has been received and we have it for consideration. They made an adjustment to the acceptable amount, with which we did not agree and, in any case, that adjustment is being discussed. The budget itself was submitted with an initial increase of $7 billion. Now that amount will be less - by how much, I don't know. Our position is - less," Oil Minister Sauat Mynbayev told Interfax. "In exchange for somewhat of an increase, we are trying to get a number of so-called 'compensatory measures,'" he said.
The shareholders of NCOC are: Agip Caspian Sea B.V. (16.81%), KMG Kashagan B.V. (16.81%), ConocoPhillips North Caspian Ltd. (8.4%), ExxonMobil Kazakhstan Inc. (16.81%), Inpex North Caspian Sea Ltd. (7.56%), Shell Kazakhstan Development B.V. (16.81%) and Total EP Kazakhstan (16.81%).
Prior to January 2009, the Kashagan field was being developed by Agip KCO. Agip KCO is a subsidiary of Eni SpA, which operates on the basis of a production-sharing agreement for the Northern Caspian Sea concluded in 1997.
Commercial production at the Kashagan field is slated to commence in December 2012 - June 2013. During Phase I, oil production is expected to be about 370,000 barrels per day, and could reach 450,000 barrels.
Phase II entails boosting production 375,000 barrels per day for at least three years. Agip oversee offshore projects, Shell and Exxon manage onshore works and drilling.
In accordance with the project's production sharing agreement, the company holds licenses for drilling operations at the Kashagan, Kalamkas, Aktoty and Kairan fields, which are comprised of 11 blocks covering a total area of 5,600 square kilometers.
NCOC estimates the recoverable oil reserves of Kashagan at 11 billion barrels and total in-place oil at 35 billion barrels.
The bulk of the work at the onshore and offshore facilities had been completed by the end of 2009, as agreed with the Kazakh government, with a view to starting production at Kashagan at the end of 2012.
Kashagan is considered the biggest oil field in the world after the discovery of the Prudhoe Bay field in Alaska in 1968.
All basic stages for sea and land-based facilities were implemented at Kashagan by the end of 2009. These efforts were approved by Kazakhstan for 2009 for the purposes of starting up production at the end of 2012.