After $136 Billion Investment To Date, Kashagan, With Est. 9 BBL EUR, Has Yet To Produce Any Crude

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Kashagan, developed by oil majors including Eni and Exxon Mobil, represents all the challenges Western countries face to secure energy supplies as Asia becomes more energy-hungry and Russia seeks to dominate resources on its borders. The field's difficult geology, remote location, harsh climate and environmental challenges make it one of the world's most complex and, at $136 billion so far, expensive energy projects.

As state-owned companies now control most global reserves, Kashagan shows how Western majors, which once dominated the industry, now have to take what chances they can to produce oil. With an estimated 9 billion barrels of recoverable oil in the Central Asian state of Kazakhstan, Kashagan is, like the tower in the Bible story, an almighty undertaking.

In temperature swings from minus 40 to plus 40 degrees Celsius, the oil in the Kazakh field is heavy in sulphur -- a hazard to health and the environment. "It's a project of immense difficulty," said Eduard Poletayev, an independent analyst who closely watches Kashagan.

Due onstream in three years, Kashagan is one of a dwindling group of giant oilfields, as cheaper and more accessible ones dry up. Only 11 such giant fields were found in the 1990s, down from 29 in the 1960s, according to investment bank Simmons & Co. "All the big oilfields have now been gobbled up and Kashagan is the last pearl in the crown of the world oil industry. That's why oil companies are fighting for it so stubbornly," Poletayev said.

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http://www.reuters.com/article/wtUSInvestingNews/idUSTRE57Q04X20090827