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Tuesday, 26 December 2017 16:15

Production ramp-up at Kashagan will run at a much slower pace than it was planned Featured

 Caspian Energy (CE):  How will the Kashagan project develop in 2017-2018? How much oil and gas will be produced in the longer term

 

Kanat Bozumbayev, Minister of Energy of the Republic ofKazakhstan: Oil production increase up to 370,000 barrels per day at the giant Kashagan field will run at a much slower pace that it was expected earlier.

Since the start-up of gas injection in August of this year the company has got new data about the reservoir performance.  Pressure reduction and relevant increase of production rate will run a little slower than it was expected at the beginning.

It is a field with enormous reserves and its operating cycle last for tens of years. The equipment is now operating in a routine mode and its service reliability complies with estimated figures and even exceeds them in certain cases.  NCOC is fully committed to reach the estimated capacity (370,000 barrels per day) as soon as possible. I think we will need 2018 to reach this production rate and we will keep studying the possibilities of accelerating this process.

 

CE: How do you plan to maintain a lower oil production volume due to the launch of Kashagan field?

Kanat Bozumbayev: The present OPEC+ agreement is in force till March 31, 2018.

Kashagan field is now in the experimental program stage. Relevant pre-commissioning operations are still underway.

To date, Kazakhstan has got no offer to extend the OPEC+ agreement. Once received, the proposal will be considered in order to develop a stance by the relevant session of OPEC+.

 

CE: Which hopes does Kazakhstan rest on offshore projects? Which of them are the most promising and significant for Kazakhstan?

Kanat Bozumbayev: It should be noted that no offshore project can be implemented within a day, considering the difficulty of its offshore development, lack of developed infrastructure and high capital expenditures.

A number of projects are currently underway in the Kazakh sector of the Caspian Sea. Of these, North-Caspian project (Kashagan, Kalamkas-sea, Kayran, Aktoty), Zhemchuzhina (Khazar, Auzov), H-block, Kurmangazy, Satpayev, Zhambyl are implemented by the national operator KMG in partnership with large foreign oil-gas companies. 

Kashagan field has been successfully launched. The following stage of development of the North-Caspian project, implying the achievement of the next stage of capacity at Kashagan, as well as the future of other fields related to this project are currently under discussion.

Together with project operators and participants, the Ministry is also discussion the possibility of synergy of Khazar and Kalamkas-sea fields, which should have a positive impact on the development of infrastructure and revenues of the republic in future.

Moreover, according to the interstate agreements, NC KazMunayGas JSC will be engaged in implementation of offshore projects in the Russian sector of the Caspian Sea. The relevant decision on Khvalynskoye field was made in the first half of this year. The issue of PSA signing is discussed also.

 

CE: Kashagan oil has a number of chemicophysical features which are unfavorable for the environment. What importance is attached to this factor in the course of the field development and possible evaluation of force-majeure situations? Has a system of environmental monitoring and detection of oil spills in the Caspian Sea been developed? How do Kazakhstan and other Caspian countries cooperate to prevent the marine environment from the oil pollution?

Kanat Bozumbayev: There are approved Rules for the organization and holding of operational environmental monitoring when performing oil operations in the Kazakhstan sector of the Caspian Sea. They determine the order of organization and conduction of the operational environmental monitoring (hereinafter OEM) during the performance of oil operations in the Kazakh sector of the Caspian Sea.

These rules are applicable within the whole water area of the Kazakh sector of the Caspian Sea. The areas covered by these rules are the mouth reaches of the rivers falling into the Kazakh sector of the Caspian Sea, bays, gulfs and water areas of the seaports.

OEM is carried out by a subsoil user. Considering the features of the production activity, a subsoil user develops a program on observation over the environmental pollution.  

The program sets objectives and tasks; determines volumes, parameters, methods, a frequency and observation points; regulates an arrangement and the procedure of monitoring in accordance with the legislation of the Republic of Kazakhstan.

In the Kazakh sector of the Caspian Sea OEM is carried out at stations which are created due to the performed and planned types of operations (oil operations).

If an accidental environmental pollution happens, a subsoil user starts performing OEM of its consequences no later than two calendar days after the pollution occurs. A subsoil user submits the results to the authorized body involved in the environmental protection and provides annual reports on impact monitoring within 3 months after the completion of the reporting period.

There are also rules for arranging and conducting baseline environmental studies (hereinafter BES) when performing oil operations in the Kazakh sector of the Caspian Sea.

To conduct BES a subsoil user attracts specialized research organizations or scientific production centers which possess an analytical laboratory.

BES operations in the Kazakh sector of the Caspian Sea include assessment of the initial condition of components of the environment. 

According to BES results, annual reports are prepared on basis of the results of surveys held in the sea and laboratory analyses of collected samples.  The reports are submitted to the authorized body for environmental protection within 3 months after the completion of the reporting year.

Framework convention on protection of the marine environment of the Caspian Sea (Islamic Republic of Iran) was signed in 2003. Five Caspian states (Azerbaijan, Iran, Kazakhstan, Russian Federation and Turkmenistan) are the parties to the Convention. The Convention entered into force on August 12, 2006 after it had been ratified by all Caspian states.

After the first session which took place in Baku in May 2007, a decision was made to call the Convention on protection of the marine environment of the Caspian Sea as the Tehran convention in honor of the city in which it was signed. Besides, a decision was made to mark the day of the Convention’s entry into force (August 12) as the Caspian Day every year.

Tehran convention is aimed at ensuring ecological safety and sustainable use of natural resources of the Caspian region. The necessity for its adoption arose from the complicated ecological situation in the region and from the need for sooner taking of measures to prevent its further deterioration in conditions of intensive use of rich biological and mineral sources of the sea.

The convention envisages the development of a number of protocols which should reflect the concrete measures for achievement of goals.

Experts of the Caspian countries, in their turn, have developed a draft of the Protocol on regional readiness, response and cooperation in case of accidents causing oil pollution. The protocol is meant to ensure regional measures on readiness, response and cooperation in case of pollution of the Caspian Sea by oil caused by the operations on the seabed, as well as in case of oil pollution by vessels and overland sources. 

The Law of the Republic of Kazakhstan “On ratification of the protocol on readiness, response and cooperation in case of oil pollution incidents to the Framework Convention on protection of the Caspian Sea's environment” was signed in March 2016.

 

CE: Is there a plan of activities on prevention of oil spills developed?

Kanat Bozumbayev: The national plan on prevention and response to oil spills in the sea and internal water bodies of the Republic of Kazakhstan was developed and approved in 2015.

Based on the risk and environmental assessment, the major task of the plan is to ensure timely, overall and efficient prevention measures, readiness for response to emergency oil spills which are causing and have caused the environmental damage.

 

CE: Which modern facilities does Kazakhstan have to prevent the consequences of such accident? 

Kanat Bozumbayev: There are approved standards and requirements for materials and substances which are necessary for conduction of cleanup operations in the sea.

Offshore facilities, main oil-pipelines, seaports are supplied with necessary materials and substances to prevent the first and second level spills.

Depending on the ways selected to prevent oil spills in the sea and conduct risk assessment, necessary additional resources, required for cleanup in the sea and coastal zone, are determined: absorbents, loaders, dispersant sprinklers, tow-ships, pumps, cisterns, barges, warehouses, barrels, rail carts, vacuum units, plastic sheets, aviations, transport facilities.

The Ministry has determined a list of dispersants meant for use in the Kazakh sector of the Caspian Sea.

Besides, a procedure of determining dispersants for their inclusion into the list of dispersants meant for the prevention of emergency oil spills in the sea and internal water bodies of the Republic of Kazakhstan has been approved.

Dispersants in their turn are meant for dispersing (emulsification) oil slicks floating in the high amount of water as scattered oil droplets.

Moreover, they lower oil concentration in the oil spill area, intensify biodeterioration pollution processes, recover interaction of the marine environment with an atmosphere, reduce fire hazard of spillage, prevent possibility of coastal line pollution, appearance of “chocolate mousse, and as result reduce the likelihood of oiling of sea birds and animals.

Dispersants should be considered as a possible option to address oil spillages. Dispersants are meant for use in the marine environment. As the Caspian Sea greatly differs from the marine and oceanic waters in terms of the water composition and salinity, a task to study the behavior of dispersants in our environment and determine a number of efficient dispersants, which can be applicable in our waters, arose.Due to the prospects of oil production in the Kazakh sector of the Caspian Sea, a matter of considering a possibility and efficiency of use of dispersants at offshore oil spillages has arisen.

Besides, the rules of application of methods of rectification of emergency oil spills in the sea and internal water bodies have been approved.

The current decree has been worked out in order to bring to conformity with the Kazakhstan Republic’s Law “On changes and supplements into some legislative acts concerning ecology and subsoil use”.

According to the Law, the authorized body for environmental protection has the right to approve the rules on application of methods of rectification of emergency oil spills in the sea and internal water bodies. 

Based on the environmental benefit analysis, the rules regulate a procedure of application of methods of rectification of accidental oil spills, and situations when their application is possible. 

There are three methods indicated in the rules:

  1. Mechanical containment and oil gathering from the water surface (oil spill booms, oil skimmers-oil gathering vessels and other equipment);
  2. Controlled burning of oil spots;
  3. Use of chemical agents: dispersants, sorbents

         The rules apply to subsoil users performing oil operations, physical and (or) legal entities carrying out operations in the sea and internal water bodies, associated with oil spill risk. The rules also apply to organizations possessing resources on handling oil spills, authorized bodies and local executive bodies engaged in rectification of the consequences of oil spill in the sea and internal water bodies.

 

CE: Could you please tell about the gas export policy of Kazakhstan? Which areas are the most promising ones?

Kanat Bozumbayev: In view of the historically developed gas transportation system, gas export from Kazakhstan is currently performed only towards Russia (gas supplies to China via the Sarybulak-Zimunai gas pipeline are not taken into account in view of low volumes). Given the lack of access to the gas transportation system of Gazprom, the gas of Kazakhstan is transferred at the border of the Republic of Kazakhstan with the Russian Federation. When the construction of the Beineu-Bozoy-Shymkent gas pipeline was ended, its compressor stations secured a technical capacity to export Kazakh gas to the PRC, and the relevant negotiations are ongoing between the authorized companies of Kazakhstan and China.

 

CE: Which benefits do you see in the fact that Kazakhstan has resumed oil transportation via Azerbaijan?

       Kanat Bozumbayev: The Republic of Kazakhstan will continue to develop the multi-vector oil transportation system aimed at improving energy security and diversifying oil transportation routes, also through expanding the existing projects and creating new transport hubs, if necessary.

At the same time the prospect of transportation of Kazakhstan oil via Aktau Port through Azerbaijan will depend on the economic attractiveness of this route for the oil producing companies of Kazakhstan.

 

CE: Kazakhstan has been the first country in Central Asia to adopt the Concept of Transition towards Green Economy until 2050. At the same time, the International Green Technology Center is expected to be established on the basis of EXPO 2017 in Astana. This center is to address the objectives of transforming the energy sector, transition to “green” business, transfer and adaptation of “green” technologies and development of finances in this area. Could you please tell us more about this project? Is Kazakhstan able to share its experience in this area with Azerbaijan?

Kanat Bozumbayev: The initiative to create the International Center for the Development of Green Technologies and Investment Projects under the aegis of the United Nations was announced by Head of State Nursultan Nazarbayev at the 70th session of the United Nations General Assembly. So, currently we, as the Ministry of Energy of the Republic of Kazakhstan, are facing the objective of establishing this center.

It is important to highlight that many international organizations, namely UNDP, UNEP, United Nations Economic Commission for Europe, OSCE, ESCAP, the Astana International Financial Center and others, welcomed the idea of establishing the Center.

A working group was created to constructively study the issue, taking into account proposals of all interested parties. It includes representatives from the ministries of national economy, ministries of investment and development, foreign ministries, the Astana International Financial Center, Astana-EXPO-2017 JSC, Nazarbayev University and others.

At first the Concept of the Center was developed.

In November 2016, the Concept was approved at the meeting of the Council on Transition of Kazakhstan to Green Economy.

In February 2017, the Ministry jointly with UNDP held the meeting of partner experts.

The Center's mission is to contribute to global sustainable development through the support of green technologies. The Center’s establishing will be based on a long-term strategy for building the potential of Kazakhstan and the Central Asia region with the use of the innovative approach and best global practices.

The International Center will cover seven main areas of activity: Energy Sector Transformation, Sustainable Urban Development, Green Business Development, Transfer and Adaptation of Green Technologies and Best Practices, Green Financing & Renewables Development, and Capacity Building for Green Growth.

Along with providing consulting services, training and demonstration of technologies, including carrying out expert examination and consulting on green financing issues, the Center for Green Technologies will speed up implementation of green economy projects.

It is expected to create domestic production and technologies in the field of green energy, to build synthetic materials, increase capacity and productivity by developing breakthrough innovations, as well as to improve the ecological situation in the region, megacities by transferring their energy supply to clean and renewable energy sources.

The Center's activities will focus primarily on the Central Asian countries (The Republic of Kazakhstan, The Republic of Uzbekistan, The Kyrgyz Republic, The Republic of Tajikistan, Turkmenistan), Iran, Afghanistan, Mongolia, Belarus and Azerbaijan.

At the same time the Center will also cooperate with the industrialized countries of the OECD, the European Union, the United States, the Russian Federation, China, India and Latin America.

The Center will be created as a legacy of the Expo 2017 Astana international exhibition and its location is supposed to be in the Best Practices Area in the territory of the exhibition.

In June 2017, the Ministerial Declaration was adopted within the framework of the Energy Ministerial Conference in Astana. The Declaration envisaged the initiative to establish the International Center for the Development of Green Technologies and Investment Projects “Energy of the Future”.

In addition, the Joint Statement with the UN agencies (UNECE, UNEP, UNDP, UNIDO and ESCAP) on the Establishment of the Center was adopted within the framework of the above-mentioned event.

At present, the Ministry is working on the issue of determining the organizational and legal form and financing of the Center.

 

Thank you for the interview 

 

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