State-owned KMG is the central Asian nation’s third largest oil producer and has stakes in all major Kazakh projects including the giant Kashagan oil field. It is Shell’s partner in several joint ventures.

Samruk-Kazyna, the Kazakh sovereign fund, plans to float KMG next year as part of the government’s privatization program.

The fund owns a 90 percent stake in the company and Kazakhstan’s central bank holds the remaining 10 percent.

A source close to KMG said Shell has been offered the chance to buy a stake of up to 20 percent, which could include the central bank’s stake. read more

Kazakhstan: US sanctions will not affect oil projects

by: Henry Foy: 8 Aug 2017

New US sanctions against Russia will not affect multi-billion dollar oil projects in Kazakhstan backed by Chevron, ExxonMobil and other western energy majors, the country’s economy minister has said. Italy’s Eni, France’s Total, Exxon and Royal Dutch Shell all hold stakes in Kashagan, another Kazakh oil field. The decision to expand sanctions… was taken to primarily target Gazprom’s under-construction Nord Stream 2 gas pipeline to Germany… partially funded by… Shell… FULL FT ARTICLE read more

By Nariman Gizitdinov: 14 October 2016

Kashagan, a vast oil field in the Caspian Sea, sent its first crude for export after about 16 years in development and more than $50 billion of investments.

The venture loaded 26,500 metric tons of crude for export into the country’s pipelines, Kazakhstan’s Energy Ministry said in an e-mailed statement. Of that, 7,700 tons was sent to the Caspian Pipeline Consortium. Reaching stable production will take “some time” as commissioning work continues both offshore and onshore, the ministry said.

The project has been plagued by multiple delays and cost overruns. A 2008 budget estimate of $38 billion jumped to $53 billion by the end of last year as the partners replaced undersea links after sour gas cracked the pipes. The crude from Kashagan is reaching an already saturated market, with prices at less than half the level of 2013 when the project hit a setback. Expectations for the field’s exports even prompted OPEC to flip supply predictions for next year. read more

Andrew Ward, Energy Editor: September 13, 2016

Royal Dutch Shell has developed a robot to monitor equipment and carry out safety checks at a remote facility in Kazakhstan — marking one of the most sophisticated examples of robots replacing humans on the front lines of the oil industry.

Shell said the Sensabot was undergoing final testing in the Netherlands before being deployed to Kazakhstan. The group plans to roll it out to other remote oilfields, as well as potential roles in refineries, chemical plants and LNG terminals. read more

Marcus Leroux: April 6 2016

Royal Dutch Shell’s newly acquired BG assets have drawn it into an impending $1.6 billion bust-up with the government of Kazakhstan.

The central Asian country has filed a claim against a group of oil and gas companies, led by BG and Eni, of Italy, relating to the share of the spoils that it will receive from the huge Karachaganak gasfield. The claim, disclosed by Lukoil, another partner in the field, is slightly less than an original estimate of $2 billion. read more

Published by Joshua Noonan: September 27, 2015

With the declared April 2015 merger of Royal Dutch Shell and BG Group, formerly British Gas, a combination of assets spanning continents is occurring. The completion date of the merger in early 2016 has had some roadblocks. In Kazakhstan’s Karachaganak Field project, the combined group could lead to Shell to hold 29.5% by 2016. Despite this, the government of Kazakhstan may be blocking the transfer of shares.

The Karachaganak Field is a gas condensate field in northwestern Pre-Caspian Basin nearly one hundred miles east of Oral.The Field was discovered in 1979, with production starting in 1984. Upon independence, AGIP, currently Eni, and British Gas, now BG Group won exploitation rights. Thence, in 1997, Texaco (currently Chevron) and Russia’s Lukoil alongside the original signatories and two companies signed a production sharing agreement for forty years. BG Group and Eni possess 29.25% share a peace and Chevron has 18% and Lukoil has 13.%. Upon arbitration and a December 2011 acquisition, KazmunayGas purchased a 10% stake for two billion USD cash and one billion in non-cash consideration. read more

By Andy Tully: Posted on Tue, 19 May 2015 

Royal Dutch Shell’s $70 billion purchase of BG Group may not be as attractive as it once seemed.

According to BG’s 2014 annual report, if British-based BG were to be taken over by another company, the government of Kazakhstan would have the right to buy BG’s 29.25 percent share in a valuable Kazakh gas field, which so far has represented some 15 percent of the company’s total production and 9 percent of the $19 billion in revenue it made last year. read more

BY MICHELLE WITTE in BUSINESS on 13 APRIL

ASTANA – Production at Kazakhstan’s giant Kashagan offshore oil field is expected to restart in 2017, Royal Dutch Shell stated in its 2014 annual report.

“After the start of production from the Kashagan field in September 2013, operations had to be stopped in October 2013 due to gas leaks from the sour gas pipeline. Following investigations, it has been decided that both the oil and the gas pipeline will be replaced. Replacement activities are ongoing, with production expected to restart in 2017,” page 27 of the annual report, released on March 12, said.

After sour gas leaks forced production to halt soon after it began in late 2013 – already years behind the original schedule – predictions as to when the project would actually produce have been repeatedly made and then pushed back, and even in late January of this year, Energy Minister Vladimir Shkolnik was announcing that Kashagain would come online in late 2016. read more

Extract from a Reuters/Rigzone article by Dmitry Zhdannikov, published Friday 6 June 2014

LONDON, June 6 (Reuters) – U.S. oil major Exxon Mobil is in line to take over as operator of the giant Kashagan field in an attempt to fix the beleaguered $50 billion project offshore Kazakhstan, industry publication Nefte Compass reported on Friday. The Kashagan shareholders are Eni, Exxon Mobil, Royal Dutch Shell, France’s Total and Kazakh state oil company Kazmunaigas, each with 16.8 percent, and Japan’s Inpex and China National Petroleum Corp. (CNPC) as junior partners.

FULL ARTICLE

RELATED ARTICLE

Kashagan Appoints Exxon Executive To Run Troubled Oil Venture

ALMATY, June 6 (Reuters) – The troubled Kashagan oil development has named an executive from U.S. firm Exxon Mobil to run the venture while also streamlining its complicated structure in an attempt to fix the beleaguered $50 billion project offshore Kazakhstan. The group said on Friday Stephane de Mahieu, an Exxon secondee, had become managing director as of May 1, 2014. However, it denied a report in industry publication Nefte Compass that Exxon would take over as operator of Kashagan saying that instead all seven oil firms involved will be effectively operators through a rejigged venture. read more

Shell has been a key participant in the Kashagan project consortium which includes Eni and ExxonMobil. Given its notorious track record of over-promise and under delivery, having Shell involved is a bad omen for any elephant project.

By John Donovan

The latest news from the “Cash All Gone” project (as it is widely known) is that due to the need to replace fatally flawed leaking pipelines, the oilfield may not restart until 2016. 

The project is already years behind schedule and countless billions over budget.

I have received some related comment and questions from a retired Royal Dutch Shell EP expert that deserve to be put into the public domain.

Shell has been a key participant in the Kashagan project consortium which includes Eni and ExxonMobil. Given its notorious track record of over-promise and under delivery, having Shell involved is a bad omen for any elephant project.  read more

Extract from oilprice.com article by James Burgess published 23 April 2014 under the headline: “Kashagan Field Plans Pipeline Replacement”

After weeks of review, the operators of Kazakhstan’s giant Kashagan oil field have concluded that pipelines carrying oil and gas will need to be replaced due to extensive damage. The consortium — which includes Eni, Total, Royal Dutch Shell and ExxonMobil — has been repeatedly frustrated by delays and engineering obstacles. With the discovery of the severely corroded pipelines, the project, which was shut down in October 2013 after a brief start, is now closed indefinitely. read more

Extracts from article by Dmitry Solovyov published on 7 March 2014 by Reuters

ASTANA, March 7 (Reuters) – Kazakhstan is suing the multinational consortium developing the huge Kashagan oilfield in the Caspian Sea for 134.2 billion tenge ($737 million) over damage to the environment, the Environment Protection Ministry said on Friday. Production at Kashagan, the world’s biggest oil discovery in 35 years, which took 13 years and some $50 billion to bring onstream, began in September but was stopped just weeks later after gas was found to be leaking from its pipelines.  Exxon, Royal Dutch Shell, Total, Eni and Kazakh state oil company KazMunaiGas each hold a 16.81 percent stake in Kashagan. read more

A version of this article appears in print on September 24, 2013, on page A4 of the New York edition

By JANE PERLEZ and BREE FENG

ATYRAU, Kazakhstan — On the northern reaches of the Caspian Sea, not far from this old Soviet town known for its oil and sturgeon, lies a vast new oil find, the biggest outside the Middle East. China was rebuffed when it asked for a stake 10 years ago.

But when the pumps finally started this month, the China National Petroleum Corporation had won a share in the project, known as Kashagan, and President Xi Jinping was in the region recently to celebrate, another indication that China’s influence has eclipsed even Russia’s across the former Soviet republics of Central Asia. read more

The facility, that operates with involvement from Royal Dutch Shell, will process 450,000 barrels of oil and 8.8 cubic meters of gas at full production.

June 1, 2013: ASTANA — British Prime Minister David Cameron unveiled a massive oil and gas processing plant on the shores of the Caspian Sea on Monday during his first visit to ex-Soviet Kazakhstan.

The British leader landed in the oil capital of Atyrau on the Caspian Sea on Sunday where he was met by Kazakh President Nursultan Nazarbayev.

Cameron is leading a large business delegation to the resource-rich Central Asian nation and hopes to sign trade deals worth more than £700 million (US$1.06 billion). read more

BY JUSTIN SCHECK: April 18, 2013, 8:27 p.m. ET

For more than a decade, the promised bonanza from Kazakhstan’s giant offshore Kashagan oil field has been a costly mirage for its developers. And the wait still isn’t over.

The companies backing the project—which include Exxon Mobil Corp., Eni Spa and Royal Dutch Shell PLC—in March missed the startup date Eni predicted last year. And now, after a decade of work and more than $30 billion in expenses, it isn’t clear when one of the world’s biggest untapped fields will produce its first drop of oil. read more

Given Shell’s history of operation in Nigeria (along with Chevron, Exxon, etc.) , and the way the company likes to operate in 3rd world regions, it is clear why Shell (along with the other super majors) has focused on Kazakhstan. It is a country rich in hydrocarbon resources. It is also another country that is run by a corrupt, dictatorial government that can be ‘influenced’ to come around to the oil companies’ way of thinking. Ideal for Shell.

FROM A REGULAR CONTRIBUTOR, A SHELL RELATED SOURCE

John,

In Peter Voser’s recently published ‘bucket list’ of key geographical areas of planned future operation it was noted that Kazakhstan was very high on Shell’s investment priority list. Attached are a few links that explain why Royal Dutch Shell and others are so interested in Kazakhstan.

This should come as no surprise to anyone familiar with the oil industry and the way Shell operates. The Caspian Basin has vast reserves of oil and gas, estimated to be second only to the Middle East despite that fact that oil and gas have been produce in the region for about 150 years. The political leadership in Kazakhstan is a corrupt dictatorship, and the Caspian Basin is one of the most heavily polluted areas of the world. There are effectively no environmental pollution issues to contend with in Kazakhstan. read more

By Nariman Gizitdinov on August 30, 2012

Exxon Mobil Corp. (XOM) and Royal Dutch Shell Plc (RDSA) are seeking bigger stakes in the Kashagan oil field and operating control before starting to expand the $46 billion project, according to two people with knowledge of the matter.

Exxon and Shell also want Kazakhstan’s government to extend the production-sharing agreement for 20 years before investing more in the Caspian Sea field, touted as the world’s biggest discovery in four decades when found, the people said, declining to be identified as the talks are confidential. read more

By Svetlana Antoncheva and Nariman Gizitdinov – May 28, 2012 6:48 AM GMT+0100

Eni SpA (ENI), Exxon Mobil Corp. (XOM) and Royal Dutch Shell Plc (RDSA) agreed to fund the $986 million costs owed by Kazakhstan’s state energy producer for one of the world’s biggest oil fields, Oil and Gas Minister Sauat Mynbayev said.

The foreign partners will pay Kazmunaigaz’s share of the costs for Kashagan this year and next, Mynbayev told reporters in Astana today. It wasn’t clear if Kazmunaigaz will repay its foreign partners out of future revenue from the project. read more

After 11 years and $39 billion of investment, Exxon Mobil Corp., Royal Dutch Shell Plc (RDSA) and their partners have yet to sell a drop of oil from what was touted as the world’s biggest discovery in four decades.

Royal Dutch Shell and its partners are to ask the Kazakh government for an extension to the 2013 deadline for the first oil from their troubled Kashagan field.

By Richard Orange, Almaty, Kazakhstan

5:40AM BST 01 Jul 2011

Kazakh oil minister Sauat Mynbayev has repeatedly threatened the consortium of oil companies with heavy financial penalties if it misses the 2013 final deadline.

The partners, including Shell, Total, ExxonMobil, Eni and Kazakh state oil company KMG, have repeatedly missed start dates beginning as far back as 2005.

A last-ditch plan to meet the 2013 deadline involved pumping at least 50,000 barrels per day of oil directly onshore, bypassing an unfinished processing plant on an artificial island. read more

Kazakhstan is planning a three-year halt to work on the main phase of the super-giant Kashagan oil field development, as international oil companies Royal Dutch Shell and Exxon Mobil fight to convince the country’s oil ministry to back a simplified design, which would slash costs by $18bn (£11bn) to $50bn.

The Kazakhs are considering shelving the new simplified design, and keeping the field producing at its initial rate of 375,000 barrels per day (bpd) for at least three years. Photo: Getty

The delay, if approved, could push the start of full production from the field well into the next decade, making it all but impossible for Shell and its partners to make an acceptable profit before the contract expires in 2037.

The Kazakhs are considering shelving the new simplified design, and keeping the field producing at its initial rate of 375,000 barrels per day (bpd) for at least three years, after which the NCOC consortium could use a greater understanding of the geology to produce a better design for the second phase, when production is expected to hit 1.5m bpd. read more

March 10, 2009: 07:12 AM ET

ALMATY, Kazakhstan -(Dow Jones)- Low oil prices and the economic crisis may cut costs of development at Kazakhstan’s largest oil field Kashagan, Royal Dutch Shell PLC’s (RDSA) general manager for the Caspian region said Tuesday.

“The economic situation and low oil prices should allow us to bring the cost down,” Campbell Keir told reporters. “But we’re continuing to invest.” read more

MOSCOW, Nov 28 (Reuters) - Oil major BP will back the long-delayed expansion of the CPC pipeline from Kazakhstan to Russia as early as December if it faces no obstacles in selling its stakes in the pipeline venture, it said on Friday.

U.S. oil group Chevron developing Kazakhstan's biggest oil deposit, said on Friday it had received a note from the authorities accusing it of neglecting Kazakh as a language of business communication.

Project delays in the high-cost Canadian oil sands have been announced in the past month by Royal Dutch Shell PLC, Suncor Energy Inc. and Nexen Inc.

A recent settlement decided that Total will provide the first managing director of the newly established North Caspian Operating Company. The decision ended more than a year of dispute between the project's international oil company partners - most notably ExxonMobil of the US, and Total, Royal Dutch Shell and Eni of Europe - and the Kazakh government.

Kazakhstan and a consortium of Western oil companies developing the Kashagan oilfield signed the final agreement on the future of the project on Friday after more than a year of tense negotiations.

Kazakhstan is interested in acquiring stakes belonging to both Britain's BP and Oman in a key Caspian Sea pipeline pumping Kazakh crude to the Black Sea, a senior Kazakh official said on Wednesday.

Royal Dutch Shell Kazakhstan said that KazMunaiGas, the state oil company, would create a joint venture with Royal Dutch Shell, the Anglo-Dutch oil and gas group, to handle the production segment of the Kashagan oilfield.

Royal Dutch Shell was on the verge of sealing a deal with Kazakhstan yesterday that could lead to taking joint control of one of the world's biggest oilfields.

ALMATY, Sept 19 (Reuters) - Kazakhstan said on Friday state oil company KazMunaiGas would create a joint venture with Royal Dutch Shell Plc to handle the production segment of the Kashagan oilfield.

However, Campbell Keir, Shell's chairman in Kazakhstan, tells an old joke that illustrates just how dominated the country is by Russia and China: "When a Kazakh wakes up, he opens his eye to the west to see if the bear is growling. If it isn't, the Kazakh turns his head to the east to see if the dragon is breathing fire. If it isn't either, the Kazakh gets out of bed."

That leaves the companies sitting on huge piles of cash. Even with a generous buy-back policy and consistent dividend payment plan, ExxonMobil, the biggest of the bunch, holds more than $40bn

ExxonMobil, the world's biggest listed integrated energy group, yesterday blamed the government of Kazakhstan for delaying the development of the world's biggest new oilfield, significantly raising the level of acrimony surrounding the troubled project.

In its attempt to take back control of its most precious resources, Russia dismantled Yukos, its most promising independent oil company; played hardball with Royal Dutch Shell in Sakhalin and appears to be making similar moves on TNK-BP.

Of the 15 former Soviet republics, Kazakhstan is sitting on the sole "superfield" discovered in the last three decades. With proven reserves of 35 billion barrels, Kazakhstan potentially contains the world's third largest reserves of oil, after Saudi Arabia and Iraq.

"The sense in the market is that peak oil is here and that things will only get worse,"...

“Shell is one of the most-efficient producers of sulphur,” Barry Clarke, a sulphur market analyst for Pentasul, said. Shell produces about 3.5 million tonnes of sulphur, much of it from its Canadian oil sands business, and its cost, Mr Clarke reckons, is merely the rail freight cost of getting the sulphur to a port, about $25 a tonne.

As part of his role as trade ambassador, Prince Andrew has been involved in brokering energy deals for British companies in Kazakhstan. Labour MP Ian Davidson said the property sale raised questions over whether there were any strings attached.

From our October 2005 Shell News Archive

Times Online: Capital expenditure will be a key number in Shell’s results. Citigroup expects capex to rise by $5 billion to $20 billion a year because of cost over-runs at facilities in Russia, Nigeria, Qatar, Canada and Kazakhstan. Such spending will not help earnings.”

Posted Saturday October 22, 2005

EXTRACT FROM BUSINESS WEEK ARTICLE

Times Online’s guide to the week’s business stories. By Bryce Elder

Shell seems as good a place to start as any. Third-quarter earnings growth at Europe’s second-largest oil company is expected to show the effects of hurricane-hit lower production.

Net income for the quarter is expected at between $4.37 billion and $5.92 billion, up 18 per cent at the median compared with $4.38 billion previously. That would be the slowest growth since the second half of 2004, when quarterly earnings surged by as much as 200 per cent as oil prices rocketed. Like BP two days earlier, Shell’s annual production target of between 3.5 million and 3.8 million barrels of oil equivalent per day may be at risk due to stoppages. read more

The Times: BG investigated over Kazakhstan customs duties

“BG is talking to the Kazakhstan Energy Minister to try to settle the deal on the terms agreed with the partners Eni, ExxonMobil, Shell and Total.”

By Angela Jameson, Industrial Correspondent

July 29, 2004

BG GROUP, the oil and gas producer, is being investigated by the Kazakhstan authorities for alleged underpayments in customs duties from the Karachaganak oil and gasfield.

The Reading-based group yesterday downplayed the investigation into its alleged underpayment of $5 million (£2.8 million) as a “routine audit”. BG rejected suggestions that the investigation was connected with the Kazakhstan Government’s ambitions to buy the company’s stake in a second oilfield. read more

The Business: Oil companies face hard drill in Kazakhstan

By Richard Orange

25 July 04

FOR the hardened oil diplomats and country experts in BG Group’s offices in Almaty, Kazakhstan, last week’s visit by the local tax police, charging the UK gas firm with illegally smuggling $2.7bn (£1.5bn, €2.2bn) worth of gas across to Russia was just business as usual. But it is also yet another sign of the toughening business climate.

BG rejects the charges, saying that it has followed the letter of the law in the way it has exported gas liquids from the field it operates in Karachaganak to be processed at Orenburg in Russia. But following the law may not be enough. read more

The Times: BG’s oil asset sale faces new threat

By Peter Klinger

June 12, 2004

KAZAKHSTAN is threatening to derail the $1.23 billion (£670 million) sale of BG Group’s Caspian Sea oil assets to a consortium that includes Royal/Dutch Shell.

The Kazakhstan Government has stunned the seven partners in the North Caspian Sea Production Sharing Agreement (NCSPSA), covering the Kashagan oilfield, by claiming it has a pre-emptive right to acquire BG’s 16.7 per cent stake.

BG sold the stake to five of the NCSPSA members last September. The company said yesterday that it had only recently been informed that Kazakhstan intended to scupper the deal and buy the stake itself. read more