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UPDATE 1-Kazakhstan looks to offset Kashagan output setback this year

Mon, 14th Apr 2014 10:12

* Kashagan not expected to produce oil this year

* Kazakhstan plans to increase oil production by 2.5 percentthis year

* Government to meet Kashagan shareholders Thursday (Adds detail, quote)

By Raushan Nurshayeva

ASTANA, April 14 (Reuters) - Kazakhstan wants to make up fora possible lack of output this year from the Kashagan oilproject by increasing output at other projects by at least 1.5million tonnes (30,000 barrels per day), the economy ministersaid on Monday.

He said the government would meet Kashagan stakeholders onThursday.

Production at the offshore deposit, the world's biggest oilfind in 35 years, started in September but was halted in earlyOctober after the detection of gas leaks in the $50 billionproject's pipeline network.

"Additional work and negotiations with users of largesubsoil reserves will be held about the possible increase ofoutput and exports from other fields by at least 1.5 milliontonnes," Kazakh Economy and Budget Planning Minister YerbolatDosayev said.

Last week, France's Total, a shareholder inKashagan, said it did not expect much oil output, if any, fromthe oilfield this year.

It is awaiting results of further analysis to assess thecosts and delays facing it and its Kashagan consortium partnerswhich include Eni, Exxon Mobil, Royal DutchShell and Kazakh state-run KazMunaiGas.

The government had great expectations for Kashagan to startproducing oil last year and officials had said they hoped to seeit produce 22 million barrels of crude by the end of the year.

Last month, Kazakh officials imposed a $737 million fine onthe consortium for ecological damage.

MEETING ON KASHAGAN

Dosayev said government officials would meet Kashaganshareholders on Thursday to discuss the project.

"On April 17, a meeting with key investors will be held bythe government of the Republic of Kazakhstan to discuss thecurrent work - what is needed to be done this year. They shouldoffer a detailed plan on what is necessary, what is to change ornot," he said.

Kashagan has presented huge engineering challenges sincework began 13 years ago. Much of it is built on artificialislands to avoid damage from pack ice in a shallow sea thatfreezes for five months a year.

The economy of the Central Asian nation of 17 million reliesheavily on oil exports. Kazakhstan holds 3 percent of theworld's recoverable oil reserves and is the second largestpost-Soviet oil producer after Russia.

Kazakhstan plans to boost oil production this year by 2.5percent to 83 million tonnes (1.7 million barrels per day).

Its largest producer is Chevron-led Tengizchevroil(TCO), which pumps oil at the huge Tengiz onshore field inwestern Kazakhstan. (Writing by Vladimir Soldatkin, editing by Jason Bush and JasonNeely)

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