North Caspian

North Caspian Oil and Gas Project Profile

Overview

The North Caspian Oil and Gas Project, located in Kazakhstan, is a significant and technically complex oil and gas development. The project encompasses several fields within the North Caspian Sea Production Sharing Agreement (NCSPSA) area.

Project Components

The project includes several key fields:

• Kashagan Oil and Gas Field: The largest and most prominent field, discovered in June 2000. It is a shallow-water field covering an area of approximately 2,678 km², with estimated geological oil reserves of over 35 billion barrels, of which up to 13 billion barrels are recoverable.
• Kalamkas Oil Field: Discovered in 2002, with geological reserves estimated at 284 million tons of oil.
• Kairan Oil and Gas Field: Discovered in 2003, with geological reserves estimated at 112 million tons of oil.
• Aktoty Oil and Gas Field: Discovered in 2003, with geological reserves estimated at 156 million tons of condensate.
• Kashagan South West Oil and Gas Field: Discovered in 2003, with geological reserves estimated at 20 million tons of condensate.

Operators and Ownership

The project is operated by the North Caspian Operating Company N.V. (NCOC), a joint venture comprising:

• KazMunaiGas (KMG): 16.88%
• Eni S.P.A.: 16.81%
• ExxonMobil: 16.81%
• Royal Dutch Shell: 16.81%
• Total S.A.: 16.81%
• CNPC: 8.33%
• Inpex: 7.56%.

Location

The project is located offshore in the northern part of the Kazakh sector of the Caspian Sea, approximately 80 km offshore from Atyrau, Kazakhstan. The fields are situated in water depths between 3 and 4 meters.

Production and Reserves

• Kashagan Field:
  • Commercial production began in October 2016.
  • Reached a maximum design capacity of 380,000 barrels per day (bopd) in the first half of 2019.
  • Plans to increase production to 420,000 bopd by 2022 and 500,000 bopd by 2027.
  • As of 2019, the field had produced 30 million tonnes of crude oil, over 8.44 billion cubic meters of gas, and 1.75 million tonnes of sulfur.
• Overall Project Production:
  • Gas production: approximately 9,152 million m³ per year as of 2020.
  • Oil production: approximately 110.98 million barrels per year as of 2020.

Facilities and Infrastructure

• Offshore Facilities:
  • Artificial islands (Island D, Island A, and early production centers on islands EPC-2, 3, and 4).
  • Drilling centers (islands DC-1, 4, and 5).
  • In-field subsea pipelines.
• Onshore Facilities:
  • Bolashak Integrated Oil and Gas Treatment Unit (IOGTU).
  • Railway complex in West Esken.
  • Crude oil is fed into the Caspian Pipeline Consortium (CPC) pipeline system for export.

Development Phases

• Phase One (Experimental Program - EP): Focused on the eastern and central parts of the Kashagan field, with commercial production starting in October 2016.
• Full Field Development Programme: Plans to develop the field further, increasing output up to 1.5 million barrels of oil per day. This includes 35 drilling centers, two offshore processing hubs, three offshore gas plants, and extensive pipeline networks.

Environmental and Social Impacts

The project has faced significant environmental and social challenges:

• Environmental Concerns: High concentrations of hydrogen sulfide in the hydrocarbon fluids, risks of oil spills, and impacts on marine life, including mass die-offs of seals and other marine species.
• Social Impacts: Negative effects on local fishing industries and livelihoods, with reports of decreased fish catches and skin diseases on fish, making them unmarketable.

Investment and Complexity

The Kashagan phase one development is one of the largest international investments in Kazakhstan, with an estimated investment of £45 billion ($55 billion). The project is considered one of the world’s most technically challenging oil and gas projects due to the harsh offshore environment and the presence of high concentrations of hydrogen sulfide.

Historical Context

• The North Caspian Production Sharing Agreement (NCPSA) was signed in November 1997.
• Exploration began in 1998, and the Kashagan field was discovered in June 2000.
• Commercial production was declared in June 2002, following additional exploration and appraisal wells.