SHOULDER TO SHOULDER

Kazakhstan 2018 | ENERGY & MINING | INTERVIEW

TBY talks to Luca Vignati, Executive Vice President, Central Asia Region at Eni, on the firm's journey in Kazakhstan, its key achievements over the last year, and support from the authorities.

 Luca Vignati
BIOGRAPHY
Luca Vignati was born in 1963 and has been in his current position since June 2016. He graduated in mining engineering from the University of Bologna in 1988. He joined the Eni Group in 1990, beginning his career as a reservoir engineer at Agip SPA.

How would you describe Eni's remarkable journey in Kazakhstan since the company first established in the local market in 1992?

The past 25-plus years in Kazakhstan have been an incredibly exciting for Eni, and we are very proud to have been engaged in two world-class projects—Karachaganak and Kashagan—since their inception. Strong commitment has shown how effective foreign investors, such as Eni and the government, can collaborate to address important challenges. Eni is the only foreign company to have participated in both projects (Karachaganak and Kashagan) from the very beginning. It should be noted that economic relations between Kazakhstan and Italy were established in a unique way. Representatives of the Italian business communities visited Kazakhstan multiple times, and His Excellency President Nazarbayev personally received them. He also sought touch points and common interests on which our two countries could collaborate. Diplomatic relations between Italy and Kazakhstan were officially established in 1992, and in early 1993, President Nazarbayev declared during a speech at the Davos WEF that Eni had an exclusive right to hold negotiations for the development of the giant gas and condensate Karachaganak field under a production sharing agreement. Later that same year, another crucial event occurred: the signing of the agreement that established a consortium of international oil companies to carry out exploration activities in the Kazakh sector of the Caspian Sea. We are proud to have been—and continue to be—part of the unique Kashagan project. Today, Karachaganak is among the three largest upstream operations in the country, successfully co-operated by Eni and Shell. The Karachaganak Petroleum Operating Company is one of the first companies in Kazakhstan to successfully introduce the Local Content Development Program and achieve positive results in implementing the Nationalization Plant, where local employees make up about 95% of the total staff.

What have been the key operational achievements at Eni's main sites in Kazakhstan over the last year?

The Kashagan plant began production in September 2016 and has been working very well since the beginning, producing a full range of products—oil, gas, and sulfur—just 48 hours after its opening. The production ramp up progressed well, and plant availability improved month by month. Oil production, before gas re-injection, has been above 200,000bpd—15% above the expected rate. In August 2017, the raw gas injection (RGI) process began when two compressors were successfully and commissioned. The oil production has already reached 300 kbbl/d (with associated gas, for 385 kboepd). We continue testing the systems and are gradually increasing the amount of gas we re-inject so that more oil can be produced. This is a world-class resource with a production life of decades, and the production facilities are performing well, with reliability at or exceeding our expectations. NCOC is fully dedicated to reaching design capacity of 370,000bpd as soon as possible. We expect the NCOC in 2018 to fully accomplish this capacity, and we will explore options to accelerate this timing. Overall, production reliability has exceeded expectations. In Karachaganak we are very pleased with the consistent KPO safety and production performances that we have achieved, with new production records in 2017 after 20 years of field operations, along with top-class safety and environmental indicators, with a gas utilization factor above 99.5% for the first time in several years.

What level of support have you seen from the authorities and what do you expect in terms of regulations going forward?

Kazakhstan is one of the most important countries in Central Asia due to its natural resources. Over the last 20 years, there has been amazing growth in the oil and gas sector, particularly in production, implanting new technologies, and the involvement of the worldwide major IOC in the energy arena. This has been possible thanks to the vision of the president and the full commitment and support from all authorities. Further improvements are being discussed, but major steps forward have been implemented. We believe that it is also in the country's best interests to introduce further reforms to the laws and regulatory framework related to gas flaring, and more closely align these with international standards—particularly the standards adopted in OECD countries that would improve the country's investment climate.