Eni group may delay Kashagan oil output until 2013

energy

Eni group may delay Kashagan oil output until 2013

By SRI ⋅ May 12, 2008 ⋅

Eni SpA, Italy’s largest oil company, and partners developing the Kashagan oil field in the Caspian Sea may delay production by as much as two years, the fourth postponement at the 7 billion to 9 billion-barrel discovery.

The start of commercial output may not occur until 2012 or 2013, said Dinara Shaimardanova, an aide to Energy Minister Sauat Mynbayev, confirming his remarks earlier in the capital, Astana. Eni in January said the field, which was the world’s biggest discovery in three decades, was expected to start in 2011.

Eni and partners including Exxon Mobil Corp., Royal Dutch Shell Plc and Total SA were forced in January to cede stakes to Kazakhstan for delays and cost overruns at the venture. Oil companies are tapping harder-to-reach fields to compensate for dwindling production in areas such as the North Sea and Alaska.

“For sure this is not good news,” said Matteo Brancolini, who owns Eni stock among the $1.85 billion in assets he helps manage at Meliorbanca Private SpA in Milan. “The market’s already taken into account the fact that there will be delays and that the announced dates are not set in stone.”

An Eni spokeswoman declined to comment on the matter and Ilya Pustogachev, a spokesman for Astana-based KazMunaiGaz National Co., declined to immediately comment.

Kashagan output, which has already been delayed three times, will reach about 370,000 barrels a day about a year after production starts and hit a peak of about 1.5 million barrels a day. The originally planned start date of 2005 was pushed back to 2008 and Eni later said production would start in 2010.

By Nariman Gizitdinov and Anthony DiPaola (Bloomberg)