Western oil majors publicly dispute QazaqGaz’s optimistic Kashagan production forecast
North Caspian Operating Company (NCOC), the operator of the Kashagan oil and gas field, has refuted QazaqGaz’s forecast that oil output will increase upon constructing new gas processing facilities. According to S&P Global, investors believe QazaqGaz should rather focus on addressing delays in the construction of these facilities, which are behind schedule.
Sanzhar Zharkeshov, CEO of QazaqGaz, previously projected that oil production at Kashagan could rise by 25,000 barrels per day (bpd) for every additional one billion cubic meters (bcm) of gas processed per year, increasing total output from 400,000 to 500,000 bpd. Kashagan is the second-largest supplier of CPC Blend oil, exported to the global market from the Black Sea port of Novorossiysk. The oil is currently priced close to the Platts Dated Brent benchmark.
As reported by S&P Global, citing NCOC, Zharkeshov’s comments may reflect a broader impatience at the slow progress in increasing production at the Kashagan oil field, a concern echoed in Kazakhstan’s national development plan and its gas supply goals. QazaqGaz is responsible for expanding gas processing capacity, but the project is behind schedule. The first phase of a gas processing plant, with a capacity of one bcm per year, was only 23% complete as of Aug. 2. This delay has pushed the completion date to the second quarter of 2026, well beyond the original target of early 2025.
In its statement to S&P Global, NCOC highlighted that Kashagan will be contributing to Kazakhstan’s economy over a production life of decades. NCOC, with its shareholders, partners and the authorities, continues to study opportunities for further growth. In this regard, cooperation with QazaqGaz will allow NCOC to increase oil production; QazaqGaz will focus on delivering the gas processing plant while NCOC will focus on the upstream scope.
Further complicating the situation are disputes over environmental violations and cost recovery.
In April, Bloomberg reported that Kazakhstan filed arbitration claims against the Kashagan consortium for over $150 billion, a figure that increased to $160 billion by August. In early October, negotiations have resumed between the government of Kazakhstan and major oil companies — Eni S.p.A., Shell plc, ExxonMobil Corporation and TotalEnergies SE — over a $5 billion environmental penalty related to the Kashagan field.
On Oct. 7, NCOC announced a planned maintenance shutdown of the Kashagan oil field. This has drawn attention as it impacts Kazakhstan’s ability to manage its OPEC+ production quota. The day before, Almassadam Satkaliyev, Kazakhstan’s minister of energy, stated that due to the repairs at the field, Kazakhstan will temporarily withhold approximately 400,000 bpd from the market.
Kashagan, one of the largest oil discoveries in recent decades, began operations in 2016. NCOC, responsible for the development, has invested around $60 billion in the project to date.
The NCOC consortium includes several key stakeholders: KMG Kashagan B.V. (16.877%), Shell Kazakhstan Development B.V. (16.807%), Total EP Kazakhstan (16.807%), Agip Caspian Sea B.V. (16.807%), ExxonMobil Kazakhstan Inc. (16.807%), CNPC Kazakhstan B.V. (8.333%) and Inpex North Caspian Sea Ltd. (7.563%).
