Kazakhstan's Kashagan field restarts after maintenance, boosting CPC Blend volumes

Kazakhstan's Kashagan oil field, the second-highest contributor to CPC Blend exports, is resuming production slightly earlier than planned following a major maintenance turnaround, the operating consortium said July 8.

The resumption, after more than five weeks, follows concerns about the reliability of Kazakhstan's CPC export route after a Russian district court in the port city of Novorossiisk ordered a 30-day suspension of operations on July 5 in a case relating to a 2021 oil spill.

Despite the court order, CPC loadings were currently continuing while the pipeline consortium appeals, top Kazakh producer Tengizchevroil said late July 7.

Landlocked Kazakhstan relies on the CPC pipeline across southern Russia to Novorossiisk for the bulk of its exports, with overall volumes reaching as high as 1.5 million b/d.

Loadings have been reduced since late-May by the four-yearly Kashagan maintenance turnaround, which entailed inspection of equipment and upgrade work, and was due for completion July 15. That work is now complete, operator the North Caspian Operating Company (NCOC) told S&P Global Commodity Insights.

"On July 8, NCOC successfully completed the scheduled turnaround activities at its offshore and onshore facilities on Kashagan. During the complete shutdown, NCOC conducted necessary maintenance and inspections and completed a number of projects allowing improvements in safe and reliable production operations going forward," NCOC said.

"After completion of the works, NCOC has gradually restarted its offshore and onshore facilities by re-opening wells and putting production systems online into normal operational mode. NCOC will now continue to ramp up production volumes with primary focus on safety and production stability."

Output at Kashagan had reached levels around 410,000 b/d prior to the shutdown and the work now completed is expected to enable a modest increase thanks to the upgrading of gas injection facilities, sources close to the operation have said.

Overall CPC volumes have been impacted by a series of disruptions in recent months starting with storm damage to loading facilities at Novorossiisk in late-March.

Export concerns

On July 8, Kazakh President Kassym-Jomart Tokayev ordered government and industry officials to step up work on securing alternative export routes, including across the Caspian Sea by tanker, although the options are thought to be limited in terms of cost and logistics.

The bulk of CPC Blend comes from three Kazakh fields: Tengiz, operated by Chevron-led Tengizchevroil, Kashagan and Karachaganak, while around 10% of the blend derives from Russian fields in the north Caspian.

NCOC comprises state-owned KazMunaiGaz, Shell, ExxonMobil, TotalEnergies, Italy's Eni, China's CNPC and Japan's Inpex.

CPC Blend was assessed by Platts at a $5.30/b discount to Dated Brent on July 7. The grade is rich in naphtha, an import component in petrochemical production.

Prices have been subject to a discount due to war risk insurance premiums in the Black Sea, although CPC Blend is not subject to sanctions affecting Russia.

On July 1, CPC said it was maintaining loadings from two out of three single-point mooring systems, generally thought sufficient for CPC loading requirements, despite ongoing work to survey the seabed and remove World War II munitions.