After 10 Years and $30 Billion, Still No Firm Word On When Kashagan Field Oil Will Flow - Rigzone
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Kashagan's challenges were evident from the time big oil companies -- including Eni, Exxon, Shell, Total SA, Statoil PLC, BP PLC and BG Group PLC -- explored the area after the Soviet Union's breakup. Companies signed a production-sharing agreement with the Kazakh government in 1997 that expires in 2041 and allows companies to recover much of their costs before paying a big portion of oil revenue to the government. Of the initial foreign oil-company players, only Eni, Exxon, Total and Shell remain.
Early exploration revealed more than 10 billion recoverable barrels of oil -- along with great challenges. The reservoir is about 12,000 feet below the northeast Caspian Sea floor and mixed with toxic sulfur gas. The sea freezes for several months a year. The north Caspian harbors endemic seals and rare sturgeon.
The companies debated who would take the project's lead, settling on Eni, though it had less experience with giant oil developments than Shell and Exxon. The companies projected first oil in 2005, though Eni soon began pushing back the startup date due to technical problems.
Missteps, cost overruns and controversies have dogged the project. Eni has disclosed in public filings that Italian authorities are investigating whether it has paid bribes in Kazakhstan. An Eni spokeswoman said the company "has zero tolerance towards illegal acts and bribery" and is fully cooperating with the authorities.
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http://www.rigzone.com/news/oil_gas/a/125911/A_30_Billion_Hole_In_Caspian_Sea
