Total Sees First Kashagan Oil in Spring 2008, Not '07

Total said that the first oil from the giant Kashagan oil field in Kazakhstan will likely flow in the spring of 2008 rather than in 2007 as expected.

Total said the 2008 startup deadline will be included in the arrangement it expects to sign soon with Kazakh authorities over the amount of compensation to be paid on delays in developing the multibillion-dollar project.

Kazakh authorities have said the arrangement could be signed by the end of February.

Total is part of consortium led by Italian energy group Eni SpA to develop Kashagan.

A wrangle between the consortium and Kazakh authorities arose in 2002 when Eni said it wouldn't be in a position to meet the 2005 deadline for launching the field into production. The Kazakh government is seeking compensation for the delay.

Eni last said it aimed to start production in 2007.

A spokeswoman for Eni declined to comment on the subject.

The consortium estimates that Kashagan, located in the Caspian Sea, holds nine billion barrels of crude oil reserves, which would allow the field to pump one million barrels a day for decades. Kazakhstan says the field holds 21.6 billion- 23.4 billion barrels.

Total said the extra delay was due to difficulty carrying out construction and drilling work in a part of the Caspian Sea that freezes during the winter.

Other consortium members include Shell, ExxonMobil, ConocoPhillips and Inpex. Kazakhstan state oil and gas company Kazmunaigaz is negotiating on behalf of the government.