NUR-SULTAN, Kazakhstan – The future of two projects in the Kazakh sector of the Caspian Sea is uncertain following multiple withdrawals by the various partners.
Shell decided to exit the Khazar project and the Kashagan consortium is pulling out of the Kalamkas More development.
Ashley Sherman, Wood Mackenzie principal analyst, said: “Kalamkas More (the largest Kashagan satellite) and Khazar (Pearls block) are fields that will undoubtedly attract future interest from international investors, just like nearby exploration blocks have since Kazakhstan’s tax reforms in 2018.
“But this is another reality check for the Caspian region’s oil and gas industry.
“Whether it’s because of tough logistics or complex geology, the shallow waters of Kazakhstan’s offshore face obstacles to full competitiveness against lower-cost deepwater opportunities elsewhere in the world.”
Sherman pointed out that although the time-lag to production would have been long – not until the late 2020s – the projects would have offered large-scale future oil production away from the country’s three mega-projects, Kashagan (offshore) and Tengiz and Karachaganak (both onshore).
He said: “The timing of the decision may surprise, given the ‘define’ stage could have enabled more studies and potentially more cost savings from a $5 billion estimate. But the decision itself highlights the project’s marginal economics in the highly competitive global portfolios of the majors.
Other companies said to be involved in the Kalamkas exit are Eni, ExxonMobil, CNPC, Total, Inpex, and KazMunayGas.