This NY Times article reports on the consortium of international oil and gas companies that have formally agreed to proceed with a $29 billion development of the Kashagan oil field in Kazakhstan, the largest oil discovery since Prudhoe Bay in Alaska more than 30 years ago.
ENI of Italy leads the consortium, which includes Royal Dutch/Shell, Exxon Mobil, Total of France, ConocoPhillips and Inpex of Japan.
Total oil reserves in the Kashagan field are now estimated to be 13 billion barrels, several billion barrels higher than original estimates. One major production hurdle is the field’s location under the Caspian Sea, which freezes over in winter. Initial production is expected to be 75,000 barrels a day, Shell said in a statement. Mr. Idrissov said production was expected to rise to more than 400,000 barrels a day by 2013.By 2015, the field is expected to yield more than a million barrels a day, about a third of Kazakhstan’s target for oil production.
The announcement is a major step forward for oil and gas production in Kazakhstan, which is considered one of the United States’ most promising alternatives to the Middle East for energy supplies. However, development has slowed in recent years because of the risk of investment in the region and the Kazakh government’s desire to renegotiate contracts with foreign oil companies that had been entered into during the early 1990’s.