AKIPRESS.COM - The $50-billion Kashagan oil project in Kazakhstan is likely to be delayed by two more years while 200km of pipeline is replaced, says Financial Times citing Erbolat Dossayev, the Minister of Economy and Budget Planning of Kazakhstan.

He expected production to start at the end of next year at the earliest – but that it could be delayed until 2016. It is the first public admission by the government that the project will not only fail to produce oil this year but may not resume production until 2016. “It will be two years,” added one industry official.

It is a blow for the consortium of companies – including ExxonMobil, Royal Dutch Shell, Total, Eni and CNPC – which have invested some $50bn in the project so far in the hope that it would one day produce as much oil as Libya. Kashagan is the world’s fifth-largest field by reserves and the largest outside the Middle East, according to the US Department of Energy.

The delay is the latest in a string of setbacks for the enormous Kashagan field, which had originally been scheduled to start production in 2005 but has become emblematic of the cost overruns and delays that have plagued major energy projects, keeping oil prices elevated even as the US shale revolution lifts supplies.

The delay has also angered Kazakhstan’s government, which had been counting on the field to catapult the country into the big league of oil producers and lift government revenues substantially.

Mr Dossayev said that the delay represented a loss of 0.5 percentage points of GDP this year. He said he hoped production could be restarted late next year, so “we can put some volumes for the crude oil production in our plan in the budget”.

“But if not we will wait until 2016,” he said in an interview in Kazakhstan’s capital, Astana.