A consortium developing Kazakhstan's giant Kashagan oil field has concluded that pipelines
carrying natural gas and oil from offshore wells for processing onshore will need to be replaced, the deputy head of the group said.
A final report on why Kashagan's gas pipeline began leaking late last year, only weeks after the project first started, is due in June, after which the consortium will decide how the pipes should be replaced, said Zhakyp Marabayev, the deputy managing director of the North Caspian Operating Company.
However, the Kazakh government doesn't favor this option. They are concerned that re-injecting the gas could damage the reservoir, potentially limiting the amount of oil that could be extracted from the field in the future.
Replacing the two 55-mile long pipelines will add to the costs of the project which is already years behind schedule and billions of dollars over budget. It will also weigh on the consortium's partners. The companies need the oil to start flowing before they can start to recoup some of the $50 billion already spent on Kashagan over the past 17 years.
Kashagan, one of the world's biggest oil projects, has been plagued by budget blowouts and management missteps that have delayed the start of production and sent it more than $30 billion over budget.
Other obstacles delaying development of the field have included the high concentration of deadly hydrogen sulfide gas in the oil and the shallow waters of the northern Caspian Sea that are covered in thick sea ice for several months of the year, requiring a huge civil engineering project to construct drilling islands protected from the ice.
The field's oil is 4,200 metres (4,590 yards) below the seabed at very high pressure, and the associated gas reaching the surface is mixed with some of the highest concentrations of toxic, metal-eating hydrogen sulphide (H2S) ever encountered. Output at Kazakhstan's huge Kashagan oilfield is not expected to restart this year after this statement.