Kazakhstan says Kashagan field will not pump oil before 2009

Almaty: Oil will not flow from the Kashagan oilfield in the Caspian Sea, the world's biggest oil discovery in the last 30 years, until 2009 at the earliest, Kazakhstan's energy minister said yesterday.

And Agip KCO, the international consortium led by Italy's ENI that is developing the site, admitted for the first time that the first production from Kashagan could be delayed from its original 2008 start date.

"Some technical issues need to be addressed, above all it is to do with the safety of the workers," Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov said on the sidelines of the Kazakh oil conference in Almaty, the country's commercial capital.

"There are some technical challenges and it's possible we are going to build some more islands."

Agip KCO has been building a series of offshore 'islands' to pump oil from the Caspian Sea bed only a few metres deep. The first two of the artificial islands were built using 4.5 million tonnes of rock.

Kazakhstan has pinned its hopes of becoming one of the world's top 10 oil suppliers by 2015 on the complicated Kashagan field, where engineers have to cope with soaring summer temperatures and freezing winters.

"Based on preliminary estimates, we will not get the first oil until 2009," Izmukhambetov said. Kazakhstan has fined the Kashagan consortium once for an earlier project delay, but Izmukhambetov said he did not foresee another penalty.

At the same oil conference last year Agip KCO had said Kashagan could produce the first oil in 2008.

Lower forecast: Production expected to be 62.5m tonnes

Kazakhstan's production of oil and gas condensate is expected to total 62.5 million tonnes this year, Energy Minister Baktykozha Izmukhambetov said yesterday, giving a slightly lower forecast than previously.

"Through to the end of the year production is planned at 62.5 million tonnes," Izmukhambetov told an oil conference in Almaty. That is down from a previous forecast of 63 million tonnes, and above last year's 61.9 million tonnes.