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Crippled Kashagan oil project a bureaucratic "nightmare"

  • The giant Kashagan oil field, which was brought to a halt by leaks shortly after start-up last year, is grappling with a bureaucratic "nightmare" on top of its engineering troubles as it strives for commercial production in 2014, according to a Reuters report.
  • The scale and complexity of the project, which has cost ~$50B so far, led its partners - which include Exxon (XOM), Shell (RDS.A, RDS.B), Total (TOT) and Eni (E) - away from the traditional single operator command-and-control model, where one of the larger companies takes charge while others provide support and share risks, costs and rewards.
  • Commercial production could still be many months away, and engineering difficulties have exposed the weaknesses of the cumbersome administrative structure, which will stay in place until oil is flowing properly.
Comments (7)
  • Michael Fitzsimmons
    , contributor
    Comments (9065) | Send Message
     
    Sure glad COP closed the sale of its 8.4% stake for $5.4 billion back in October!

     

    http://bit.ly/1hXXuSS
    2 Jan, 12:12 PM Reply Like
  • geologist
    , contributor
    Comments (273) | Send Message
     
    Michael - How much money did COP have invested in Kashagan? I agree that it was a good move by COP to get out of the project. Regards.
    3 Jan, 03:12 AM Reply Like
  • User 353732
    , contributor
    Comments (4913) | Send Message
     
    XOM and CVX are about the only publicly traded energy companies that can afford to and do think in terms of decades, not years. Eventually the fields will produce and future XOM shareholders will benefit. The same is true for CVX's venture into Argentine shale and XOM's strategic partnership in Russia.
    These companies are not and cannot be nimble pioneers( PXD, CXO) or even large ranchers( COP, EOG); they are long term settlers and farmers
    2 Jan, 02:58 PM Reply Like
  • dostoevsky228
    , contributor
    Comments (198) | Send Message
     
    This has been a strategic and financial nightmare. At least XOM's huge arctic venture with Rosneft is just them. At least XOM only has a 16% stake....
    2 Jan, 03:06 PM Reply Like
  • treyminator
    , contributor
    Comments (85) | Send Message
     
    So they put the non-experienced Italians in charge of this huge oil project because the big companies could not agree which major would get the prestige of being the operator. Egos caused unnecessary delays and cost overruns. Then, when it was painfully clear Eni was not up to the task, the big boys create a joint panel to run the project because everyone is jealous of their competitor and no one is willing to let a truly qualified company run the show. And now,to make things worse, they have appointed the French to investigate and try to figure out what went wrong and how to fix the issue(s). The shareholders of these companies ought to file derivative suits against the respective boards to recover the projects cost overruns and lost profits. Leave your egos outside this project gentlemen and appoint a competent company to get this done. Either pick XOM or RDS to operate the field and start making money like you're supposed to!
    2 Jan, 07:16 PM Reply Like
  • sl100
    , contributor
    Comments (112) | Send Message
     
    XOM is desperate as it has dwindled its reserves past few years. Not replaced reserves for several years now. Many of its projects have cost overruns. With So much production coming online sure to trigger oil prices to drop. XOM needs oil price of 105$. They also overpaid for recent US aquasition. But I see a lot of pump on XOM in the media so it has to be some kind of big seller getting out. I would not short the stock but at these levels good advise to investor is to buy some where around $90. Warren buffet bought this arounf 85-86 but the media keeps bring this story but never tells what price WB bought this it self should rise some questions if the price here is right to buy.

     

    I would rather go with HP or other player as XOM is too big to grow 450B Mkt Cap and expected growth rate us 2-4%.
    2 Jan, 09:37 PM Reply Like
  • geologist
    , contributor
    Comments (273) | Send Message
     
    Sl100 - I understand what your message is here, but it would be hard for someone not familiar with Exxon to read your message. Regards.
    3 Jan, 02:59 AM Reply Like
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