GO
Loading...

UPDATE 1-Kashagan group says no oil restart date yet, probe results delayed

(Adds Kazakh government source, details, background)

ALMATY, March 27 (Reuters) - A consortium developing Kazakhstan's huge Kashagan oilfield said on Thursday the results of a probe into an industrial accident there were now expected in the second quarter of 2014, and it was unclear when crude production can be restarted.

"The results of these investigations are expected in March/June 2014," a consortium spokesman said in written comments to Reuters.

"Consequently, no decision has been made on the pipeline rehabilitation plan, therefore no indication on the date of the restart of production can be made at this moment in time."

A Kazakh government source told Reuters separately that the authorities did not expect investigation results earlier than May. "We have received the readings, but we now need time to decipher them," said the official who asked not be named.

Delayed oil output at the offshore deposit, which took 13 years and about $50 billion to launch, unnerved the Kazakh authorities who have already sued the consortium with a 134.2 billion tenge ($737 million) for ecological damage.

The North Caspian Operating Company (NCOC), which had originally said it expected final test results in February or March, also on Thursday reiterated its earlier statement, identifying sulphur stress cracking as "the root cause of the pipeline issues" at Kashagan.

"This process occurs if steel of high hardness is exposed to high concentrations of H2S under high pressure in the presence of water," the NCOC spokesman wrote.

"This mechanism is not at all related to normal corrosion (formation of rust) but solely to the hardness of the steel."

Production at the Caspian Sea field, the world's biggest oil find in 35 years, started in September but halted in early October after gas leaks were detected in its pipeline network.

The consortium, led by Exxon Mobil, Royal Dutch Shell, Total, Eni and Kazakh state oil firm KazMunaiGas, also faces a bigger risk that Kazakhstan could seize a bigger stake in Kashagan or refuse to reimburse a big chunk of the money spent to bring it on stream.

Before the gas leaks brought Kashagan output to a halt, the consortium had failed to achieve so-called "commercial output" at the field by Oct. 1 as stipulated in its contract.

This means NCOC members will not be reimbursed for costs between then and the date when they finally achieve commercial output, KazMunaiGas head Sauat Mynbayev said this month.

NCOC also includes Japan's Inpex with 7.56 percent and China National Petroleum Corp (CNPC) with 8.33 percent, which it bought from ConocoPhillips last year.

(Reporting by Dmitry Solovyov; Additional reporting by Mariya Gordeyeva; Editing by William Hardy)