Kashagan woes lead to shake-up

June 9, 2014

The North Caspian Operating Co. BV (NCOC) appointed ExxonMobil secondee Stephane de Mahieu as managing director effective 1 May.

De Mahieu succeeds Pierre Offant, who was appointed managing director of NCOC in 2008, after the Republic of Kazakhstan collaborated with the seven companies participating in the existing North Caspian Sea Production Sharing Agreement to form the NCOC. The consortium became operator of the beleaguered Kashagan field in 2009. Agip KCO was the former operator.

Kashagan is located in around 4200m of water in the northern Caspian Sea, with reserves estimated at 35 billion bo. Heralded as the world’s largest oil discovery in 35 years, the field has since sputtered into and out of production since first oil 11 September 2013. Its first foray into production didn’t last a week before a gas leak was detected and operations were shut down. On 9 October, another leak was detected. In April 2014, Reuters reported Eni’s now-CEO Claudio Descalzi said that contingency plans were employed should the giant be sidelined for the remainder of the year. He also said that two of Kashagan's pipelines might merit replacement.

Later, Erbolat Dossayev, the Kazakhstan minister for economy and budget planning, told the Financial Times that he hoped commercial production could restart in 2016.

Further structural changes

Local Kazakh paper Ak Zhaik reported that changing the managing director is but the first change to the NCOC. The consortium will consolidate some activities that were previously split between the co-venturers.

"The transition of the Kashagan project from development to production operations provides an opportunity to further integrate and consolidate operator and agent activities to position the venture for future North Caspian Sea production sharing agreement (NCSPSA) resource development. To capitalize on this opportunity, the NCSPSA shareholders have agreed to work towards a progressive transition from the current operating model to a single consolidated joint-venture company," NCOC said.

No changes to the production sharing agreement or to the ownership are currently foreseen.

The Kashagan consortium is comprised of Italy’s Eni, ExxonMobil, Royal Dutch Shell, France's Total and Kazakh state oil company KazMunaiGas, each with 16.8%, along with Japan's Inpex (7.63%) and China National Petroleum Corp. (8.3%).

(Photo of Kashagan from Total)

Read more:

Kashagan restart faces more setbacks

Kashagan back online

New gas leak arrests Kashagan

Kashagan contract for Wood Group JV

Eni shake-up yields new CEO



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