The consortium heading up development of the Kashagan project will need to spend a further $3.6bn to replace the faulty pipework which has rendered the plant idle for the last year.
With $50bn already spent, Kashagan is the world’s most expensive oil and gas project but has so far yielded no hydrocarbon production.
The problem is believed to have been with the pipework’s anti corrosion coating, which may have been degraded by overexposure to sun during the construction process. When production was started in September 2013, numerous leaks were detected immediately, as Kashagan’s highly sulphurous sour gas leached through the metal pipework.
Kazakhstan’s energy minister confirmed that the repairs to the pipe infrastructure would cost between $1.6bn and $3.6bn.
Kashagan requires over 200km of new pipework to restart production at the Caspian facility.
Kashagan’s oil is 4,200 metres below the seabed at very high pressure, and associated gas reaching the surface is mixed with some of the highest concentrations of toxic, metal-eating hydrogen sulphide (H2S) ever encountered.
“Taking into account the high risks of repeated leaks by choosing pipe material of specification L360 (X52) as envisaged by the basic scenario, there is high probability the contractor will opt for an alternative scenario of using pipes covered with non-corrosive alloys,” a Kashagan report said.
