Italy’s Eni and Kazakhstan’s state run oil and gas player KazMunayGaz are preparing to drill a shallow-water Caspian Sea exploration well near Kazakhstan’s largest offshore oil and gas project, Kashagan.
The well will be drilled in the Abay block southwest of Kashagan, where Eni is a major shareholder.
Together with Tengiz and Karachaganak, Kashagan is one of three giant foreign-led oil schemes in Kazkahstan, a major supplier of world crude.
Speaking earlier this week after meeting with top Eni executives, Magzum Mirzagaliyev, executive chairman of Kazakhstan’s state oil and gas company KazMunayGaz, told Kazakh television channel 24KZ that both companies are moving ahead with plans to drill an exploration well in the third quarter of this year.
“Eni confirms we planned an exploration well [in Kazakhstan] in 2024”, a company said in a statement to Upstream.
The Eni and KazMunayGaz 50:50 joint venture Isatay Operating will carry out exploration on the Abay block, which has a spending commitment from the two companies of around $300 million, Mirzagaliyev added.
According to Astana-based Isatay Operating, the Abay wildcat was originally planned for 2021 but has been repeatedly delayed.
However, Kazakh-owned drilling barge Caspian Explorer, which was lined up to drill the well in 2021, remains the rig of choice for the operator’s programme, despite standing idle at the Caspian port of Aktau since 2018.
The Caspian Explorer is owned by UK-listed Caspian Sunrise, in which a group of individual Kazakh investors hold an interest of more than 48%.
The company bought the barge for less than $3.7 million in 2020, according to its annual report.
According to Caspian Sunrise, the company signed its first commercial drilling charter for the Caspian Explorer in March 2023 to drill a well to a planned depth of 2500 metres in the summer of 2024 with Isatay Operating.
Based on the agreed terms, Caspian Sunrise expects the contract to bring an operating profit of between $10 million and $15 million, and in December said work is under way to prepare the barge for the drilling assignment.
According to the latest technical and environmental impact filings submitted by Isatay Operating to Kazakh authorities and prepared by Permnipineft, a project design subsidiary of Russian oil producer Lukoil, Caspian Explorer is capable of working in a water depth of between 2.5 and 5.5 metres.
However, in its filings, Permnipineft warned that pre-drill preparations may require the contractor to drop thousands of tonnes of stones to the sea bottom at the drilling site to aid a successful installation of the barge, because the expected water depth at the location is eight metres.
The Kazakh sector of the Caspian Sea has become increasingly shallow over the past two decades, with the average sea depth falling by 35 centimetres between 2021 and 2023, according to Kazakhstan’s Environment and Natural Resources Ministry.
In the previous decade, shallow-water exploration and development in the Caspian Sea came to a standstill following a rapid increase in costs and complications at Kashagan, with the development project requiring the time-consuming and expensive construction of artificial islands in shallow waters.
The rising costs, falling water levels and technical complications are all regraded by industry observers to have helped deter investments in similar offshore projects in Kazakhstan.
The Caspian Explorer, which will employ a zero-discharge policy, will be supplied from the Caspian port of Bautino, which lies about 160 kilometres away and also serves Kashagan.
Once the Caspian Explorer has been installed on location, Permnipineft expects the drilling, testing and liquidation of the well to last about 62 days in total.
However, this timeframe may easily increase by at least 15 days because of anticipated adverse weather and possible complications during drilling.