Just a trickle, but oil starts to flow at Kashagan

After years of delay, the largest oil field outside the Middle East started producing crude this week, offering a valuable new deposit to meet the world's rising energy needs.

The first oil to flow from the Kashagan field, in Kazakhstan, was just a trickle. But a consortium of oil companies have ambitious plans to increase production over the next several years.

"This is one of the most complicated projects in the world," said Claudio Descalzi, the chief operating officer for exploration and production at Eni, the Italian oil company involved in the project.

"It's really an historical moment. It's first-quality oil, very light oil, and we are close to countries that present the best markets."

When geologists discovered the field in 2000, it was the largest new deposit since the discovery of the Prudhoe Bay field in Alaska in 1968. And it remains so today, suggesting that such oil sources are becoming harder to find.

But the project has been stalled for years, amid technical problems, disputes with the Kazakh government, and infighting among the oil companies. Such fields have also become less important given the advances in pumping oil from abundant shale reserves.

The companies tapping into the reserve - KazMunayGas, the national oil company of Kazakhstan; Shell, Total, Inpex, Exxon, Conoco and Eni - are taking a slow-and-steady approach.

The initial production is just 26,000 barrels a day, a mere drop in the global oil bucket. Eventually, the project could add about 1.5 million barrels a day to global output. If it reaches that level, the oil will amount to about 1.6 per cent of the world's total, or roughly the amount Libya produces.

The cautious approach reflects the nature of the project. The very characteristics that caused the field to be overlooked for decades - its depth and location in the Caspian Sea - pose major risks.

The oil is under tremendous pressure as it comes out of the ground, and the sea is home to endangered sturgeon and a rare species of seal. The crude is also mixed with poisonous gas.

As part of safety conditions, the companies have piled up artificial islands for drilling pads and laid pipelines on the seabed, which has added to the delays and expenses. The project is already five years behind schedule and has cost $US41 billion ($44 billion).

New York Times