Seeking Alpha

Report: Exxon may take over as Kashagan operator

  • Exxon Mobil (XOM) reportedly is prepared to take over as operator of the Kashagan field in an effort to fix the beleaguered $50B project offshore Kazakhstan.
  • Discussions are continuing but Exxon could be appointed as soon as at the end of June, the publication Nefte Compass quoted a senior Kazakh official as saying.
  • Kashagan production started last September after numerous delays but was halted in October after the discovery of gas leaks in the pipeline network, and output may not restart until 2016.
  • The other Kashagan shareholders are Eni (E), Shell (RDS.A, RDS.B), Total (TOT) and Kazakh state oil company KazMunaiGas, each with 16.8%, and Japan's Inpex and China National Petroleum (PTR) as junior partners.
Comments (7)
  • Larry Smith
    , contributor
    Comments (2681) | Send Message
     
    That field has been nothing but trouble, since XOM is the best operator in the business, seems like a good idea to turn the operations over to them.
    6 Jun 2014, 08:13 AM Reply Like
  • treyminator
    , contributor
    Comments (85) | Send Message
     
    I commented and advocated XOM take over a couple of months ago when an article mentioned Eni and Total had tried managing, unsuccessfully, this complicted project. Why Kazakstan and the oil partners allowed anyone other than XOM to run the show was beyond me. There's a reason Rosneft partnered with XOM - it has brains and experience developing big, difficult projects (Sakhalin, Paupa New Guinea, etc.). Frankly, I'm astonished the group is still thinking about it.
    6 Jun 2014, 08:42 AM Reply Like
  • john001
    , contributor
    Comments (834) | Send Message
     
    RDS has lots of technical experience developing sour reservoirs so I have to wonder what the H they were doing during the JV technical meetings. Perhaps the screw-ups were a result of political interference?
    6 Jun 2014, 09:00 AM Reply Like
  • retired358
    , contributor
    Comments (203) | Send Message
     
    According to the management time line, in 2007, KazMunaiGaz becomes operator for the project with Shell to become operator after the start of commercial operations.

     

    With all of the companies involved and the friction between them and the local government, it is unclear who really had responsibility for or the ability to intervene.

     

    So, I am not sure which company is responsible for the pipeline disaster. It is certainly not clear from what I can tell that Shell was/is responsible...
    6 Jun 2014, 12:57 PM Reply Like
  • Michael Fitzsimmons
    , contributor
    Comments (9570) | Send Message
     
    I'm just so relieved and thankful that COP management bailed out of this project and got $5.4 billion on the way out the door.
    6 Jun 2014, 01:32 PM Reply Like
  • treyminator
    , contributor
    Comments (85) | Send Message
     
    I agree with you Michael about COP. I'm long in XOM, CVX, COP and move in and out of the independents like, EOG, CLR, APA and WLL. COP was smart getting out of several foreign projects. COP is not in the same class of XOM or CVX so it made good sense to recognize who and what you are and focus investment in more projects within COP's expertise. I don't mind XOM or CVX getting involved in major, difficult projects because they eventually bring most into production and make good money. XOM and CVX use much longer time horizons in the business planning whereas EOG, CLR and the like are worried about increasing production and revenues next quarter. XOM publishes a 40 year energy outlook, which demonstrates this player looks way out into the future. XOM caught a lot of flack about XTO purchase at "height" of natural gas prices in this country. Eventually, nat gas will move higher as coal is phased out of use in this country and XOM's investment will prove itself very valuable.
    7 Jun 2014, 08:54 AM Reply Like
  • User 353732
    , contributor
    Comments (4998) | Send Message
     
    The Kazaks are learning what the Russians already know: corruption, nepotism and jingoism are no substitutes for competence. XOM is the most competent operator in the industry and several oil and gas developments projects in the world are now so complex and expensive that only XOM and CVX can credibly and profitably operate them.
    In time Brazil and Mexico will also come to realize this and investors in XOM will be rewarded for understanding that organizational competence and corporate culture are XOM's real wealth producing assets: the visible physical assets are a consequence of these invisible mental and psychic assets.
    7 Jun 2014, 12:18 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs