The Karachaganak field, one of Kazakhstan's three largest Western-led oil and gas developments, is preparing to start up a major project, KEP-1B, aimed at extending its production plateau. This project is the final large capital investment agreed upon before the field's production sharing agreement expires in 2037.

Project Scope and Status

KEP-1B is the second phase of the Karachaganak Expansion Project. Its core task is to bring online the field's sixth reinjection compressor, with a capacity of about 3 billion cubic metres per annum, alongside a gas dehydration unit and an expansion of the gas gathering network. The operator, Karachaganak Petroleum Operating (KPO), reported the project was 98% complete at the end of February, with partial commissioning starting in March. The current plan is to complete commissioning by the end of 2026, which will also involve bringing online remaining debottlenecking works to enable higher gas reinjection rates.

Challenges and Delays

The construction of KEP-1B has fallen behind schedule, missing a previous start-up target for the first quarter of this year. The project has faced challenges including alleged cost overruns by the engineering contractor. Its progression has also occurred amid a deteriorating relationship between the Kazakh government and KPO, with the operator facing a multibillion-dollar claim from the government.

Production Context and Gas Dependency

Karachaganak produces very light crude, or condensate, but faces increasing flows of sour associated gas as it works to maintain plateau production. Historically, billions of cubic metres of raw gas from the field have been sent annually to a Gazprom processing plant near Orenburg in Russia. This dependency creates vulnerability, as demonstrated last year when a Ukrainian drone attack on the Orenburg facility forced KPO to reduce condensate production. Concerns over further disruptions underscore a push for Kazakhstan to develop its own gas processing facility at Karachaganak.

Production Data and Goals

In 2024, KPO produced almost 24 Bcm of associated gas, reinjecting about 14.2 Bcm to underpin condensate production of 239,000 barrels per day. Associated gas output has been rising, with increases of 3 Bcm in 2023 and another 1.6 Bcm in 2024 reported. The startup of the sixth compressor is intended to help maintain the field's condensate production plateau between 218,000 and 240,000 barrels per day. Meanwhile, Kazakhstan's domestic gas demand is growing, while its production has recently fallen, partly due to a halt at the Tengiz field.