Kazakhstan’s $48 billion Kashagan oil project in the Caspian Sea will definitely resume output by 2017 after partners replace pipelines, said Arnaud Breuillac, Total SA (FP)’s president of exploration and production.
Output will start at the earliest in 2016, Breuillac said in a phone interview yesterday. Total, along with partners Exxon Mobil Corp. (XOM), Eni SpA (ENI) and Royal Dutch Shell Plc (RDSA), stopped output in October last year, a month after production began, due to a natural gas leak.
“This is clearly the mother of all projects,” Breuillac said. “The combination of challenges on this project are without equivalent in our industry.”
The cost of developing Kashagan doubled and the planned start of output was delayed by eight years to 2013 as remote islands had to be built to support drilling equipment and staff quarters. Output from Kashagan will contribute to Total’s plan to boost output to 2.8 million barrels a day in 2017 from 2.1 million on average in the first half this year, Breuillac said.
Oil producers will seek to cut costs amid falling crude prices and boost production from technology that allows for a wider range of sources from shale to deep sea offshore deposits, Breuillac said. Total will focus on exploring for and producing energy from offshore fields and on liquefied natural gas projects, he said.
‘Playing Field’
“The playing field has increased dramatically” with shale, Breuillac said. “Companies like Total have more potential projects and access to resources than ever before.”
Lower oil prices won’t change Total’s strategy, he said. Brent crude has dropped 26 percent since June 19 to $84.67 a barrel today. “Large companies like Total were more or less built to be able to weather storms,” Breuillac said. “A sudden fall of the oil price should not impact our strategy. It will reinforce our commitment to cost reduction.”
Total has made a “very strong” and “amitious” bid for 40-year onshore oil concessions being offered in Abu Dhabi, he said. United Arab Emirates Energy Minister Suhail Al Mazrouei told Bloomberg Oct. 2 that government-run Abu Dhabi National Oil Co. will award new concessions soon.
Source: Bloomberg
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