Eni doubtful on Kazakh Kashagan restart in 2015

April 30, 2014

Italian oil major Eni is not counting on any production from Kazakhstan's huge Kashagan oilfield this year or possibly next due to faulty welding at the $50 billion project, its CEO designate said, Reuters reported on April 29.

Production at Kashagan, the world's biggest oil find in 35 years, started last September but was stopped in early October after gas leaks were found in the pipeline network.

"It's worse than we considered. We have already put in place contingency plans to cover a possible lack of production in 2015," Claudio Descalzi told analysts in a conference call on April 29 after Eni reported a drop in first-quarter profits.

Descalzi, the current head of exploration and development who is slated to take over as CEO in May, said the two gas and oil pipelines at the plant would most likely have to be replaced. "The problem is related to some spot hardness points on the pipes but mainly to the welding," he said. Recent tests in Britain, France and Italy have shown that the pipes' carbon steel material was fit to withstand the hostile Kashagan conditions, he added. The Kashagan consortium is considering changing the width of the oil and gas pipelines that run to shore from their current 28-inch diameter to 20 inches, Descalzi said, adding that it may make them easier to fit. He said the extra costs and the timeframe involved in replacing the pipelines would be known in June.

Copyright: Reuters, 2014