Sept. 18 (Bloomberg) -- Eni SpA, Italy's largest oil company, plans to produce the first oil from the Kashagan field in Kazakhstan in 2012.

The company is making ``over 50 percent progress on project development,'' Guido Michelotti, a senior vice president at Eni, said today in a presentation posted on the company's Web site. It expects daily output to reach 150,000 barrels of oil equivalent in the fourth quarter of 2012, rising to 370,000 barrels a day in 2014.

``This is positive for Eni albeit there will still be some skeptics,'' Jason Kenney, an ING Wholesale Bank analyst in Edinburgh, wrote by e-mail from Eni's presentation in Atyrau, Kazakhstan.

Eni, which has led the Kashagan project since 1997, agreed in January to cede its role as sole operator of the field after the start of production. Eni and partners, including Exxon Mobil Corp., Royal Dutch Shell Plc and Total SA, pushed back the start date four times amid cost overruns and delays. Eni Chief Executive Officer Paolo Scaroni said in July he expected to pump the first oil before October 2013.

Kashagan is the world's largest oil field discovered in the three decades after Alaska's Prudhoe Bay field was found in 1968. The offshore field in the Kazakh part of the Caspian Sea has about 13 billion barrels of oil equivalent recoverable reserves, according to Eni.

Output Delay

Some Kazakh officials predict production won't start at Kashagan until 2014, almost a decade behind the original planned date. Difficult technical conditions for drilling and shipments mean the field may come on stream a year later than a previous target of 2013, Nurlan Balgimbayev, an adviser to President Nursultan Nazarbayev, said Sept. 4.

The budget for the experimental phase of the Kashagan oil field in Kazakhstan has risen to $36 billion, 33 percent more than a year ago, as project costs increase, Kazakh Energy Minister Sauat Mynbayev also said Sept 4. The overall cost of starting and running the field through the 2040s would be about $136 billion, according to Mynbayev.

KazMunaiGaz National Co. will double its stake in the project to about 16.8 percent after the partners reach an agreement on the new contract terms in October, Arzhan Takachakov, an Astana-based spokesman at the Kazakh state-run oil company, said Sept. 15.

To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

Last Updated: September 18, 2008 13:22 EDT