Kazakhstan's Kashagan Field Reaches Design Capacity of 370,000 bpd After Sour Gas Injection Completion

Technical Achievement and Field History

Kashagan is one of the world's largest oil discoveries of the past three decades, with estimated recoverable reserves of approximately 9-13 billion barrels of oil equivalent. Its development has been one of the most technically challenging and expensive in hydrocarbon history, with total investment exceeding $50 billion to date by the NCOC consortium. The fundamental technical challenge — handling petroleum with extremely high hydrogen sulphide (H2S) content of up to 25 percent by volume — caused repeated equipment failures and necessitated complete replacement of the island-to-shore pipelines after their initial H2S-induced corrosion was discovered in 2013, shortly after first production. The replacement pipeline programme and the associated sour gas injection system, which re-injects H2S-rich gas into the reservoir under pressure rather than releasing it or processing it to sulphur, took a decade to design, construct, and commission.

The SGI system, completed and tested in October 2026, operates by separating the H2S from associated gas produced alongside the oil, compressing it, and injecting it through dedicated injection wells into the Kashagan reservoir at depth. This eliminates the primary cause of pipeline corrosion, allows the produced oil to be transported through standard carbon steel pipelines with basic H2S treatment, and simultaneously maintains reservoir pressure — enhancing long-term recovery factors. The completion of the system is considered by petroleum engineers as one of the most significant technical achievements in sour gas handling in the modern oil industry, providing a reference case for similarly challenging fields in the Caspian and Middle East.

Production Economics and Export Revenue

Sustained production at 370,000 bpd represents an increase of approximately 150,000 bpd from Kashagan's previous operational ceiling of around 220,000 bpd, producing an annual output increase of approximately 55 million barrels. At current Brent-linked prices of approximately $75 per barrel (Kashagan crude trades at a modest discount due to the additional processing requirements for its sulphur content), the production increase generates approximately $4.1 billion in additional annual revenue for the NCOC consortium, of which KazMunayGas's share is approximately 16.88 percent. Kazakhstan's national budget, which relies on oil revenues for approximately 40 percent of government receipts, will benefit from both the NCOC dividend uplift and from the production tax, profit tax, and royalty revenues on the incremental barrels.

The economic significance of Kashagan's production normalisation extends beyond the direct revenue increase. For the first time in thirteen years, Kazakhstan has a major producing asset operating at its designed technical parameters, providing a platform for meaningful production growth decisions. The NCOC Phase 2 expansion — which would target an additional 200,000-250,000 bpd from Kashagan through additional production wells and infrastructure — has been under preliminary study for several years. Phase 2 final investment decision, which industry analysts expect to be considered in 2027-28, would potentially position Kazakhstan's total Kashagan production at over 600,000 bpd by the early 2030s, making it a more significant element of non-OPEC global supply.

Export Routes and the CPC-BTC Strategic Balance

Kashagan's current export arrangements route approximately 80 percent of production through the Caspian Pipeline Consortium (CPC) pipeline to the Russian Black Sea port of Novorossiysk, a routing that has created strategic exposure for Kazakhstan given Russia's wartime behaviour toward international shipping and energy infrastructure. Russia's temporary closure of the CPC pipeline on technical grounds in 2022 — widely interpreted as political pressure — prompted Kazakhstan to accelerate evaluation of alternative export routes, including expanded use of the Baku-Tbilisi-Ceyhan (BTC) pipeline through a Trans-Caspian tanker route and a potential new Trans-Caspian pipeline.

With Kashagan at design capacity, the volume arguments for Trans-Caspian route investment are stronger. A Trans-Caspian pipeline (TCP) connecting Aktau or Kuryk to Baku would allow full integration of Kashagan and Tengiz production into the BTC system, bypassing Russian territory entirely and routing exports to the Mediterranean at Ceyhan. The legal framework for such a pipeline was provisionally clarified by the 2018 Caspian Status Convention, which gives the five littoral states authority to agree on pipeline routes without requiring consensus from all five — removing Russia's and Iran's de facto veto over a TCP. Azerbaijan, Kazakhstan, and Georgia have all expressed support for the project in principle. NCOC has commissioned a pre-FEED study for a TCP option, and the EU's Global Gateway programme has included TCP feasibility support in its Caspian corridor investment mapping.

Sources

• NCOC – North Caspian Operating Company: Kashagan SGI completion announcement
• Kazakhstan Ministry of Energy – Kashagan production update October 2026
• IEA – Caspian oil production outlook 2026-2030
• S&P Global Commodity Insights – Kashagan ramp-up: market implications