Consortium to cut Kashagan initial phase budget by $1 billion

energy

Consortium to cut Kashagan initial phase budget by $1 billion

By SRI ⋅ July 6, 2009 ⋅

(SRI) - The consortium of oil companies developing the Kashagan oil field will lower the budget for the development of the project by at least $1 billion as global economic downturn drives down prices for equipment and material, Kazakhstan’s Minister of Energy Sauat Mynbayev said.

The $1 billion cut will be applied to the initial development phase, due to last until commercial production begins in 2012 and projected to cost $32 billion. The estimated budget for the entire project is $136 billion.

“The [Kashagan] managing committee has adjusted the budget […] due to the current price dynamics for equipment and other items,” Mynbayev reportedly told journalists.

The Kashagan consortium said last week that the impact of the global economic downturn would likely result in lower project costs but did not name any figures.

The consortium consists of KMG, Eni, Exxon Mobil, Royal Dutch Shell, Total, each holding a 17.81-percent stake, ConocoPhillips (8.4 percent) and Inpex (7.56 percent). The project operator is the North Caspian Operating Company (NCOC), which comprises of all partner companies, each responsible for a different area of the project.