FSU/ Eastern Europe: Kazakhstan

FSU/EASTERN EUROPE

Kazakhstan

Activity has been dominated by news about the exploration and delineation of OKIOC’s giant Kashagan oil find offshore. Last February, Eni announced that it had been selected by fellow consortium members as operator for the field. Meanwhile, numerous field development projects continue.

Former Soviet Union Click for enlarged view

Exploration. OKIOC followed last summer’s giant Kashagan East 1 discovery with a second well, Kashagan West 1. It was spudded in October, about 30 mi west of the discovery in the northern Caspian Sea. Drilling to a 16,346-ft TD finished last spring, and the consortium quickly reported good news on May 3. Eni and other OKIOC partners said that Kashagan West 1 tested up to 3,400 bopd and 7.6 MMcfgd through a 32/64-in. choke. Three weeks later, OKIOC moved the Sunkar drilling barge back east and spudded a third well. Located 6 mi north of Kashagan East 1 and 43 mi southeast of Atyrau, this is the first of up to five appraisal wells that will be drilled before 2003. OKIOC operator Eni already estimates Kashagan’s reserves at 10 billion bbl of oil.

Texas-based First International Oil Corp. (FIOC) signed several JV agreements in April. The firm agreed to join Rosneft and Itera Holdings in exploring the 829,000-acre Federovskoye license, contiguous to giant Karachaganak field. Another deal was signed with Rosneft to explore the 1.2-million-acre Adaiski Block, 43 mi east of super-giant Tengiz field. In addition, FIOC will explore and develop shallow fields on the 3.2-million-acre Sagiski Block with Falcon Energy Overseas. Finally, FIOC will partner with Potential Oil, to explore the 1.1-million-acre Begaidar Block.

Drilling / development. Operators increased their drilling significantly last year. Wells drilled rose 72%, while footage drilled increased 73%, to 560,000. A doubling of drilling is forecast this year.

Chevron has spent $2 billion since 1993 to develop the centerpiece of Kazakhstan’s E&P sector, Tengiz field. This summer, Tengizchevroil (TCO) said that it will spend an additional $2 billion to implement further expansions at the field. A three-year plant facilities expansion was completed last year, to bring output up to 260,000 bopd in 2001. Now, TCO is in an initial engineering stage for the next expansion. TCO added an additional rig last year, to sustain aggressive drilling, and a third rig is being added this year.

At Tengiz field onshore Kazakhstan, Chevron completed a three-year production facilities expansion, bringing output up to 260,000 bopd. The company said it will spend another $2 billion to embark on yet another expansion phase, for which initial engineering is already underway. (Photo courtesy of Chevron Corp.)

By the time 2002 begins, the consortium (Eni, BG, Texaco and LUKoil) developing Karachaganak field will have spent $2.5 billion. However, in the 2002-to-2006 period, the group plans to spend another $2 billion on the second development phase. The money will fund development drilling and infrastructure improvements to allow production to reach 300,000 bpd of liquids and 2.47 Bcfgd. Recent output was 50,000 bopd and 250 MMcfgd.

Texaco completed a 35-sq-mi, 3-D seismic survey at North Buzachi oil field in Mangystau. The company then conducted appraisal drilling at the site and completed the work in July 2001. Purpose of the program was to confirm field reserves, preparatory to undertaking second-phase development that would triple production to 12,000 bopd by drilling 30 wells. A decision to undertake full field development is likely in 2002.

Operated by Calgary-based Nations Energy, the Karazhanbasmunai venture has moved forward with drilling 50 wells on its Karazhanbas field license in Mangystau. The firm by late last year had drilled 20 wells and raised production to 18,000 bopd from 7,000 bopd. This year’s goal is 45,000 bopd.

Maersk and partner Veba Oil & Gas entered into a third phase at Saigak oil field. The firms have earmarked additional funds for further development this year.

Production. Combined crude and condensate output increased 16%, to 700,320 bpd. Natural gas production grew 22%, to 1.163 Bcfd.

Subsidiaries of Kazakhoil produced about 118,000 bopd. TCO accounted for 229,000 bopd, representing the seventh straight year of increased output at Tengiz field. Other Kazakh companies, combined, produced close to 355,000 bopd. TCO plans to begin reinjecting sour gas back into the Tengiz reservoir. This will enable the firm to boost output still further.

Last March, the Tengiz / Black Sea oil pipeline was inaugurated. Running between Tengiz field and the Russian port of Novorossiysk, the $2.8-billion line will carry 600,000 bopd by the end of this year.

Kazakhstan is working to develop a long-term gas strategy for harnessing excess production that the country expects to enjoy in coming years. Economy Minister Zhaksybek Kulekeyev said that the government envisages production of up to 47 Bcm/year by 2012.