New Pipelines To Cost Kashagan Oil Project Up To $3.6B

Reuters

ASTANA, Oct 10 (Reuters) - Kashagan, the world's most expensive oil project, will have to spend another up to $3.6 billion to replace leaking oil and gas pipelines, which also could delay the restart of production, the Kazakh energy ministry said.

Production at the Kashagan reservoir, the world's biggest oil find in recent times, started in September last year but was halted just a few weeks later after the discovery of gas leaks in the $50 billion project's pipeline network.

Replacing the pipelines at the oilfield, which lies in the Caspian Sea off western Kazakhstan, will cost between $1.6 billion and $3.6 billion, the Kazakh Energy Ministry said in a document obtained by Reuters on Friday.

The multinational consortium developing Kashagan has identified stress cracking due to sulphur-laden gases as "the root cause of the pipeline issues" at the oilfield.

The final cost of the replacement will depend mainly on the resistance to corrosion of the pipes used in laying the new pipelines, the energy ministry said in the document sent to the Kazakh parliament.

The field's oil is 4,200 metres (4,590 yards) below the seabed at very high pressure, and associated gas reaching the surface is mixed with some of the highest concentrations of toxic, metal-eating hydrogen sulphide (H2S) ever encountered.

"Taking into account the high risks of repeated leaks by choosing pipe material of specification L360 (X52) as envisaged by the basic scenario, there is high probability the contractor will opt for an alternative scenario of using pipes covered with non-corrosive alloys," it said.


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