Kazakhstan's Kashagan oil field still pumping at reduced rates amid pipe leak probe

Production at Kazakhstan's second-highest producing oil field, Kashagan, remains limited to a quarter of normal capacity, or around 100,000 b/d, following an outage in early August, according to a source close to the situation Aug. 15.

The giant field in the Caspian Sea was shut down on Aug. 3 after a gas leak was discovered at the Bolashak onshore processing plant near the city of Atyrau. Following repairs, restart procedures began on Aug. 10, according to the operator, the North Caspian Operating Company.

However, investigations are still underway to determine the cause of the leak and a section of ruptured pipework has been sent abroad for analysis, Energy Minister Bolat Akchulakov was quoted by state news agency Kazinform as saying Aug. 14.

The ministry earlier issued a statement saying production was at around 100,000 b/d. That remains unchanged, the source close to the situation told S&P Global Commodity Insights, adding that a timeframe for ramping up to full production would be possible only after the analysis was complete.

The Kashagan shutdown comes as planned maintenance limits production at Kazakhstan's highest-producing field, Tengiz, due to work on one of the plants there, scheduled to last into September.

The operator of the CPC Blend export route, which typically loads around 1.4 million b/d at the Russian port of Novorossiisk, reported a significant reduction in overall volumes on Aug. 3, citing the issue at Kashagan as well as a reduction at Tengiz.

CPC Blend is a significant contributor of relatively light sweet crude to the Mediterranean and Black Sea markets, with exports also shipped as far as East Asia. The crude is noted for its high naphtha content, useful in petrochemical production.

However, the Kashagan development has a troubled history of hydrogen sulfide corrosion. The original startup in 2013 was abruptly suspended to enable the replacement of equipment, delaying the startup by three years and taking the total investment expenditure to over $50 billion.

Corrosion return

Akchulakov described the nature of the problem in similar terms, saying the leak came from piping that had been allowed to stand for an extended period, creating a corrosion risk. "This is an old problem dating back to 2012: a hostile environment, high hydrogen sulfide content. A piece of the damaged pipeline section has been cut out and sent for examination overseas," he said, quoted by Kazinform. "We're now awaiting the conclusion, indicating the reason for the appearance of cracking. The whole complex is now being subject to checks, around 24 pipes, all of which are being checked."

The partners in the Kashagan operating consortium are ExxonMobil, Shell, TotalEnergies, Italy's Eni, China's CNPC, Japan's Inpex and state-owned KazMunaiGaz.

In terms of overall CPC Blend loadings, a finalized loading program seen by S&P Global Commodity Insights on Aug. 11 indicated a moderate reduction in August volumes to 5.03 million mt, or nearly 1.3 million b/d.

CPC Blend typically contains a small portion of Russian crude, but is not subject to international sanctions against Moscow.

The blend was assessed by Platts, part of S&P Global, at a $4.50/b discount to Dated Brent on Aug. 15.