Azernews.Az

By Aynur Jafarova

Accession of the Chinese energy giant China National Petroleum Corporation (CNPC) to the project on development of giant Kashagan field located in the Kazakh section of the Caspian Sea will yield positive results, senior analyst of the Agency for Research of Investments Profitability Murat Abulgazin believes.

"China gives concrete proposals and proposes concrete financing. The company is pragmatic, practical and works actively and offensively. This is normal. While other investors think and trade too much, someone should actively pass to the onset," Abulgazin told Trend on September 9.

He recalled that the launch of commercial oil production in Kashagan was repeatedly postponed. However, it is important for Kazakhstan that the project would work and income to the economy would begin, the expert noted.

"The project stalls in terms of finance and perhaps due to certain issues we don't know. After the financial crisis, as a result of changes in the oil and gas market, new trends appeared, centers of consumption and production shifted. The recalculation of company's opportunities and capacities takes place due to this. We hope that Kashagan will be activated with China's coming," Abulgazin noted.

He also said that today interests of many countries are concentrated in the energy resources of the Caspian Sea.

"Today, the Caspian Sea is a reflection of a great geopolitical game between power centers. Oil and gas market is more affected by geopolitical factors rather economic ones," the expert said.

According to him, China is interested in the energy resources of the Caspian Sea, as China's economy grows day by day and subsequently, the demand for energy resources also increases.

Abulgazin went on to say that in their statements managers of Kazakhstan's oil and gas sphere say that in the first stage of the field's development, oil from the Kashagan field will not go towards China, but through the pipeline system of the Caspian Pipeline Consortium, as such transportation option is more advantageous.

"The production should be increased for deliveries to China," he stressed.

Chinese President Xi Jinping who was on an official visit to Kazakhstan on September 6 - 8, said at a press conference in Astana on Saturday that Kazakhstan and China agreed on the sale of share in the project on development of the Kashagan field to the CNPC.

"An agreement on China's share in the Kashagan field was achieved," Jinping said after the talks with his Kazakh counterpart Nursultan Nazarbayev.

Furthermore, the heads of two national companies - CNPC and KazMunaiGas - signed an agreement on sale of KMG's 8.3 percent share to CNPC.

Kashagan is one of the largest fields discovered in the past 40 years. Recoverable oil reserves of Kashagan are estimated at 11 billion barrels, whereas total geological crude reserves stand at 35 billion barrels. It is believed to be the largest oil field in the world after Prudo Bay in Alaska. Besides, natural gas reserves are estimated at over 1 trillion cubic meters.

The Kashagan commissioning is a sequential process that involves more than 40 actions preceding the commencement of production and gradual reaching of the target level due to the scale and complexity of the project.

Production is planned to gradually increase over the second half of 2013. It is expected that around 180,000 barrels per day will be extracted at the first phase, and the figure will reach 370,000 bpd during the second phase.

In July 2013, the Kazakh Oil and Gas Ministry said Kazakhstan intends to use the priority right to acquire the share of ConocoPhillips in the production sharing agreement on the development of the Kashagan field.

Earlier, KazMunaiGas head Lazzat Kiinov said in an interview with Reuters that the Chinese company CNPC will buy a stake in the Kazakh Kashagan oil field on the Caspian shelf for over $5 billion.

Kazakh Oil and Gas Minister Uzakbay Karabalin said earlier that commercial oil production at Kashagan field in Kazakhstan's Atyrau region will begin no later than this October, and perhaps even earlier.

"In general, the project is ready by 98 percent," Karabalin said. "We viewed the state of readiness of the islands, from which oil will go. There is hope that production will start in October. If it starts earlier, we will be happy. Rigs should be docked and work consistently, without a single mistake and leak. So, there is high responsibility. But at the same time we saw that the contractors have worked actively. We hope that this year will be successful for us."

Experts believe that the increase of oil production in Kazakhstan completely depends on the start of the Kashagan output as it is currently the only oil field capable of significantly boosting domestic oil production.

The future development projects would open up the opportunities to increase the production volumes significantly and this will turn Kashagan into one of the largest suppliers for the world energy market.