The international operator of the Kashagan oil field in Kazakhstan has rejected predictions by the national gas company, QazaqGaz, that an increase in oil production would result from the construction of new gas processing facilities. The operator, North Caspian Operating Company (NCOC), stressed that QazaqGaz should focus on its main role in the realization of these infrastructures, which are significantly behind schedule.
The statement comes after QazaqGaz CEO Sanzhar Zharkeshov claimed that Kashagan’s oil production would increase by 25,000 barrels per day (bpd) for every cubic gigmeter per year (Bcm/yr) of gas processing capacity. gas added. These ambitions are part of an ambitious expansion plan by QazaqGaz aimed at achieving an interim target of 500,000 b/d of oil production.
Kashagan, whose current production is around 400,000 b/d, is the second largest contributor to Kazakhstan’s oil exports, mainly via the Black Sea port of Novorossiysk. CPC Blend oil is sold at prices close to the Platts Dated Brent benchmark, reflecting the light and smooth quality of the crude.
Delays at Processing Facilities
However, increasing oil production has progressed slowly, in part due to litigation over alleged environmental violations and recovery of development costs. NCOC, made up of ExxonMobil, Shell, TotalEnergies, Eni of Italy, CNPC of China, Inpex of Japan and state-owned KazMunaiGaz, has no stake in QazaqGaz, but is involved in adding processing capacity to gas.
Zharkeshov’s comments may reflect general impatience with the lack of progress in increasing Kashagan’s production, as expressed in a recent national development plan, as well as national gas supply targets.
Delayed Construction of Facilities
Zharkeshov described adding new gas processing facilities as the main way to increase Kashagan’s oil production. His company is already building a 1 Bcm/year treatment facility as part of the first phase of Kashagan’s development. However, this construction is behind schedule: it was only 23% complete as of August, according to a statement from the Prime Minister’s Office, and is now expected to be commissioned in the second quarter of 2026, instead of the first quarter of 2025 initially planned, according to KazMunaiGaz.
Additionally, NCOC is yet to make a final investment decision on a proposed phase 2 expansion of Kashagan, which is expected to be divided into two parts: A and B, with part A expected to help achieve the target production of 500,000 b/d.
QazaqGaz’s widely publicized plans for additional gas processing facilities to support Phase 2 – as well as Zharkeshov’s forecasts for increased associated oil production – have not yet been approved by NCOC.
Growth Perspectives and Collaboration
“NCOC will continue to contribute to the Kazakh economy over several decades of production,” NCOC said. The company, along with its shareholders, partners and authorities, “continues to explore additional growth opportunities,” she added. “In this context, cooperation with QazaqGaz will enable NCOC to increase oil production when QazaqGaz will focus on the delivery of gas processing facilities, while NCOC will focus on upstream operations. »
QazaqGaz has taken an increasingly public stance on Kashagan’s growth, following the signing of contracts in 2024 with a Qatari entity, UCC Holding, for the construction of two gas processing facilities dedicated to Kashagan gas, with capacities of 1 Bcm/year and 2.5 Bcm/year, and commissioning planned for 2026 and between 2028 and 2029, respectively.
Zharkeshov described the planned additional facilities as a “win-win situation” for all parties, bringing increased gas and oil production. According to sources close to the situation, the gas is expected to be supplied free of charge by NCOC to the facilities.
NCOC previously identified its primary task in the proposed 2A expansion as the construction of a gas pipeline from the offshore field to planned gas processing facilities onshore. However, it remains unclear whether there is unanimity within NCOC on how much gas can be released into the domestic grid, as opposed to re-injecting the gas to maintain reservoir pressures and maximize oil recovery.
Kashagan is currently undergoing a month-long planned maintenance outage, announced by NCOC on October 7. This maintenance interruption has sparked discussion, as it is central to Kazakhstan’s plans to compensate for excess quotas as part of its membership in the OPEC+ producer group.
The CPC Blend benchmark, part of Commodity Insights, was assessed on October 11 at a discount of 45 cents/barrel compared to Dated Brent.
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