The massive Kashagan oil field in
Kazakhstan, in which Italian energy giant Eni owns a 16.81%
stake, is years behind schedule and has gone over budget by $30
billion, The Wall Street Journal has reported.
"The Caspian Sea-based project isn't working," despite $50
billion in investments from some of the world's biggest energy
providers, reports the WSJ, calling the project "the elephant in
big oil's room".
Kashagan is one of the largest oil fields discovered over
the past 40 years, with estimated reserves of about 35 billion
barrels of oil in place.
Discovered in 2000 and originally scheduled to be active by
2008, the project's original operator was Eni's Agip KCO, but
the project suffered a series of delays, forced cost increases
and friction with local authorities.
In October 2008, the Kazakh government came to an agreement
with consortium companies to form the North Caspian Oil Company
(NCOC), which took over the operator role from Agip KCO.
The co-venturers in the original consortium were made
shareholders in NCOC, each holding the same participating
interest held in the preceding project agreement.
However, Royal Dutch Shell took control of second-phase
development planning from Eni at the start of 2009, according to
a 2010 article on Energy-pedia News.
Shell radically simplified second-phase design, slashing
$18 billion from the estimated cost, reducing it from $68
billion to $50 billion, the energy giant's website said.
Eni, ExxonMobil, Shell, Total and KazMunaiGas each have a
16.81% stake in the project.
Inpex owns 7.56%, while ConocoPhillips held a 8.4% stake
until last year, when the Kazakh government exercised preemptive
rights to acquire it.
The Chinese CNPC then bought a 8.33% stake from the
government in a deal valued at about five billion euros,
according to press reports.
The WSJ reports that the project is "stalled indefinitely"
at the moment.
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