Activities

MAIN PRODUCING FIELDS/INTERESTS Karachaganak (Eni 32.5% - CoOp.)

Eni has been operating in Kazakhstan since 1992. Eni is the co-operator of the Karachaganak field which is in production and up to January 2009 was the sole operator of the North Caspian Sea Production Sharing Agreement (NCSPSA) for the development of the Kashagan field.

In 2009, Eni produced 115,000 barrels of oil equivalent per day, including 70,000 barrels per day of oil and condensate and around 7,3 million cubic metres per day of natural gas. 

North Caspian Sea Production Sharing Agreement - Kashagan
The North Caspian Sea Production Sharing Agreement defines the terms and conditions for exploring, developing and utilising the Kashagan field, which was discovered in the offshore area of the Caspian Sea. Eni was the sole operator, up to January 2009, of the consortium and holds a 16.8% stake in it, while the other partners are the state-owned KazMunaiGas and Total, Shell and ExxonMobil, each of which owns a 16.81% stake, ConocoPhillips, with 8.40%, and Inpex, with 7.56%. The stakes held by the partners were recalculated, with effect from 1 January 2008, in accordance with the agreements reached in October 2008 with the Kazak authorities. 

In 2000, the NCSPSA Consortium discovered the gigantic Kashagan field in the northern part of the contractual area in the Kazak part of the Caspian Sea, and subsequently discovered the Kashagan South West, Kalamkas, Aktote and Kairan fields in the same area.

Kashagan is considered to be one of the most important discoveries of hydrocarbons in the world in the last thirty-five years. Eni has estimated that recoverable reserves amount to between 7 and 9 billion barrels, a figure which could increase to 13 billion by partly re-injecting the gas, and that production could peak at 1.5 million barrels per day.

The development plan for the oil field, which will be implemented in different phases, includes the drilling of around 240 wells and the construction of production centres on artificial islands that can receive the production from other satellite artificial islands. The majority of the commercial production will consist of oil, while the gas extracted will mainly be used (around 80%) for re-injecting into the deposits in order to maintain the pressure. The gas that is not re-injected will be treated in order to remove the hydrogen sulphide and then used as fuel for the production of energy for the production plant, while any residue will be sold on commercial markets. 

In October 2008, in accordance with the Memorandum of Understanding signed in January of the same year, the Kazak authorities and all the international partners in the NCSPSA consortium signed an agreement for the development of the Kashagan project.
The key points of this agreement are: the international partners will proportionally reduce their stakes in favour of KazMunaiGas; the value of the consortium will be transferred to the Kazakhstan Republic by means of modifying some of the terms of the PSA; and the setting up of a new operational model for carrying out operations on the project that will ensure a larger role for the Kazak partner in managing the operations and will divide the executive responsibility for carrying out the subsequent development phases of the project among the international partners.
The new operational model also provides for the setting up of a joint operating company, the North Caspian Operating Company (NCOC) BV, owned by the seven consortium partners and to which operational responsibility was transferred in January 2009. Development, drilling and production operations are delegated by NCOC BV to the main partners of the consortium, with Eni retaining responsibility for the execution of phase 1 (the Experimental Programme) and for the onshore parts of the subsequent development phase (phase 2) of the oil field.

In accordance with current plans, production start-up (phase 1) is expected for the end of 2012. Once the Kashagan project has been fully developed, a production plateau of 1.5 million barrels/day of oil is expected for the end of the next decade, representing a 25% increase compared with the estimate made in 2004 in the original development plan. 

In the 12-15 months after start up the commissioning of the treatment and compression plant for re-injecting the gas into the deposit will be completed, reaching a production capacity of  370,000 barrels/day by 2014. Production capacity in the first phase will increase up to 450,000 barrels/day with the increased compression capacity for re-injecting the gas that will be available when the offshore plant in phase 2 of the development starts up. Phase 2 is currently in the Front End Engineering Design (FEED) stage.

The Consortium is currently evaluating a number of options for exporting the production to international markets, including:

• using the existing infrastructure that is represented by the gas pipeline belonging to the Caspian Pipeline Consortium (CPC) that connects the Kazak Tengiz field, near the Caspian Sea, to the Russian oil terminal at Novorossiysk (on the Black Sea) – in which Eni holds a 2% stake – and to the Atyrau-Samara oil pipeline;
• the construction of a new transportation system aimed at connecting the Bolashak plant to the port of Kuryk, on the Caspian Sea, and then linking up with the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, in which Eni holds a 5% stake;
• the construction of a transportation system connecting Samsun, a Turkish town on the Caspian Sea, with Ceyhan, on the Mediterranean coast, in order to avoid having to transport the oil across the Bosporus  and Dardanelles Straits.

Karachaganak

Situated onshore in the western part of the country, Karachaganak is a giant onshore hydrocarbon deposit that produces oil, condensate and natural gas, with recoverable reserves estimated at 5 billion boe. The operations carried out by the Karachaganak Petroleum Operating BV (KPO) consortium are regulated by a 40-year Production Sharing Agreement that expires in 2037. Eni is a co-operator in the consortium and holds a 32.5% stake.

In 2009, total production from Karachaganak amounted to 238,000 barrels/day of liquids (with Eni's share amounting to 70,000) and 25 million cubic metres/day of natural gas (7.3 thousand cubic metres for Eni). The exploitation of the reserve is carried out by producing liquids (condensates and oil) from the deepest part of the reserve and re-injecting associated gas into the upper parts. Approximately two-thirds of the liquids produced are stabilised at the Karachaganak Processing Complex (KPC) – with a capacity of over 150,000 barrels/day – before they are sent to western markets through the Caspian Pipeline Consortium pipeline (2% Eni) and, since 2006, also through the Atyrau-Samara pipeline, which is connected to the Russian export system. The non-stabilised liquids and the gas that is not re-injected into the deposits are sold on the local Russian market through the Orenburg terminal.

In June 2007, an agreement was signed between the KPO consortium and the KazRosGaz joint venture (comprising KazMunaiGaz and Gazprom), stating that as from 2012 KazRosGaz will receive approximately 16 billion cubic metres per year of un-treated natural gas, which will be subsequently treated at the Orenburg plant. This agreement is a further phase in the development of the Karachaganak field and creates the conditions for the launch of "Phase 3" of the project, which will allow the KPO consortium to obtain over 2 billion barrels of oil equivalent of added reserve of gas and oil. Preliminary engineering work carried out as part of phase 3 of the  Karachaganak development project has identified the best method of completing the development of the oil field. Start-up of the first stage of development could begin at the end of 2013. 

The project includes the installation of a gas treatment and re-injection facility, in order to increase the amount of gas sold to Orenburg to a total of 16 billion cubic metres/year and also to increase the production of liquids up to approximately 14 million tons/year. Approval by the authorities for proceeding with Phase 3 are at the moment  the subject of technical and commercial discussions.

Work is continuing on the construction of the 150-kilometre Uralsk Gas Pipeline, which will connect the deposit to the Kazakhstan gas pipeline network, and completion is expected at the end of 2010.

Eni-KazMunayGas cooperation agreement
In November 2009, a cooperation agreement was signed for the development of industrial infrastructure and exploration and production in Kazakhstan. The agreement was signed following the preliminary Memorandum of  Understanding signed in July 2009 and stipulated that Eni and KazMunayGas (KMG) would carry out exploration operations in the Isatay and Shagala area, in the Caspian Sea, study ways of optimising gas use in Kazakhstan and evaluate numerous industrial initiatives including a gas treatment plant, a gas-run electricity generation plant, a shipyard and upgrading the refinery at Pavlodar, where KMG holds the majority shareholding.
The final decision regarding investment for these projects will be taken within two years of the completion of technical and commercial analyses.

Caspian Pipeline Consortium (CPC) Oil Pipeline
Eni holds a 2% stake in the Caspian Pipeline Consortium (CPC), which constructed and runs the oil pipeline that transports oil from the Tengiz field, in Kazakhstan, to the Russian oil terminal at Novorossiysk, on the Black Sea.

Saipem, together with other partners, has completed various contracts as part of the Karachaganak project, including the construction of production units, gas treatment plant, equipment for recovering liquids and condensate and the Karachaganak-Atyrau oil pipeline and relative pumping station.

In November 2004, as part of the programme to develop the Kashagan field, Saipem was awarded a contract for the construction and installation of an underwater pipeline and, in 2005, it was awarded another two contracts for the installation of the marine infrastructure system and for running two drilling plants. 

In 2009, work continued on laying an offshore pipeline, on behalf of Agip KCO, as part of the programme to develop the Kashagan oilfield with the Kashagan Trunkline and Production Flowlines project. The contract for this programme is for the engineering, procurement of materials, coating, laying and start-up of the pipelines, fibre-optic cables and umbilicals. The pipeline s were provided by the client.
In July 2010, Saipem signed an extension to the contract until December 2011 and will now also provide the engineering, procurement, construction and installation of production and service pipelines – for a total of 34 kilometres – and the relative umbilicals and fibre-optic cables – for a total of approximately 40 kilometres.
The project also entails the planning and installation of 5.2 kilometres of underwater pipe section couplings that will make it possible to construct the next development phase without interrupting production of the wells already operating.
During 2009, work continued on the Kashagan Piles and Flares project. The contract is for the construction, assembly, transportation and installation of piles, flares and sixteen boats for containing the plant modules. The contract also involves the procurement, construction and installation of the relative anchoring and protection structures.
Work continued on the preliminary contract for the Kashagan Hook Up and Commissioning project, which began in 2008. The contract for the project, which was awarded in partnership with Aker Solutions, is for connecting and setting up the sea-based structure and the pre-fabricated structures and for completing the modules at the Kuryk yard. Work is due to be completed in 2012.

During 2009 drilling and workover operations, carried out on behalf of  Karachaganak Petroleum Operating BV (KPO),continued in the province of Uralsk.
During 2009, three company-owned rigs continued drilling operations in the provinces of Uralsk and Aktobe, on behalf of Zhaikmunai Llp, Maersk Oil Kazakhstan and OilTechnoGroup. In addition, four rigs were used, one of which was rented from the Kazakhstan company, Kazburgas, and the other three from the American company, Parker.

In May 2009 Saipem was awarded a new offshore contract in Kazakhstan as part of the experimental phase of the project to develop the Kashagan field, situated in the northern part of the Caspian Sea, that provides for the production of oil and associated gas by means of an artificial marine structure system referred to as Block D and Block A.
In June 2009 Agip KCO awarded Saipem a new contract, as part of the development project for the Kashgan field, for leasing two 3,000 HP land-based drilling rigs. Work is expected to commence sometime between the third quarter of 2010 and the first quarter of 2011 and will last for five and a half years for each rig.
In November 2009, Saipem was awarded new contracts to provide various types of Technical Services and plan and implement new projects in the "Renewable and Environmental" business area.
Technical Services are typically engineering and management project operations carried out for Saipem clients during front end and executive phases, while "Renewable and Environmental" business is a recent innovation in the onshore business unit sector that focuses on new projects aimed at decontaminating land and water, reducing harmful emissions and producing electricity from renewable energy sources.   
In March 2010, Saipem purchased from Agip KCO the extension of the ‘Kashagan Piles and Flares' contract for the installation of a marine infrastructure system, as part of the experimental phase of the development of the Kashagan deposit. The contract was extended to December 2010 and is for the construction, assembly, transportation and installation of support piles and flares for the marine structure, together with the installation of 14 barge 1 modules.
The contract also includes the procurement, manufacture and installation of the relative anchoring and protection structures, and the specially built Ersai 1 construction ship will be used to carry out the work. The piles and flares have been made in the Kuryk shipyard Kazakstan, which is owned by Ersai where Saipem holds a 50% stake.