By Smith, Pamela Ann
The Middle East
Kazakhstani Foreign Relations--Russia
Kazakhstani Foreign Relations--United States
Offshore Oil Fields
Russian Foreign Relations--Kazakhstan
United States Foreign Relations--Kazakhstan
Offshore Kazakhstan International Operating Company--Management
Pamela Ann Smith reports on how a new oil find off the coast of Kazakhstan has spured international internation investors.
Turkey is keen to reduce the flow of oil tankers through the Bosphorus.
The discovery of one of the world's largest oil fields in the Caspian Sea has led to renewed international interest in a region that has witnessed intense power rivalries for more than a century. The current high world oil price is also fuelling global investment in the surrounding countries of Central Asia and the Caucasus, underlining once again the impact future developments in the area are likely to have on the Middle East and OPEC oil producers in the coming decades.
The field, known as Kashagan, lies in the north-west Caspian off the coast of Kazakhstan and is reported to cover an area 75 kilometres long by 35 kilometres wide. Drilling began this year under the auspices of its concessionaire, the Offshore Kazakhstan International Operating Company (OKIOC).
William Zempolich, the company's head of exploration said in October that preliminary results suggested it was "one of the largest discoveries made in the past 30 years". General manager Keith Dallard added it was "much, much bigger than anything we've seen in the North Sea".
While OKIOC, whose partners include such big oil multinationals as ExxonMobil, British Gas (BG), Royal Dutch/Shell, TotalFinaElf and Phillips Petroleum, is reluctant to estimate the size of its potential reserves, unofficial estimates have put the possible figure in the range of 25 to 60 billion barrels. Senior Kazakh officials have suggested that Kashagan could be the second largest offshore site in the world, ranking just behind Saudi Arabia's massive Ghawar field. After 2004, when OKIOC brings Kashagan on stream, Kazakhstan's oil exports are expected to rise dramatically, up from a daily average of about 680,000 barrels of crude this year.
Jan Kalicki, the outgoing US Ombudsman for Energy and Commercial Co-operation with the New Independent States, said in London in December that Kashagan could be producing as much as one million barrels a day when output reaches its peak. Since then, Menno Grouvel, vice-president of TotalFinaElf exploration and production for Europe and Asia, has confirmed his company is expecting "to make fresh investments" in the field. "We are investing in Kazakhstan to enable Europe, which will soon experience shortages of energy, to buy it from here," he told reporters in the Kazakh capital, Astana, in December.
However, successful exploitation of the field will depend on the construction of new transport networks, capable of handling large volumes of oil produced in a landlocked sea. Industry analysts and senior ministers from the Caspian states have pointed out that crucial decisions are needed on two fronts: the building of huge new export pipelines; and measures to resolve political differences regarding the territorial division of the Sea. Both issues have led to intense diplomatic efforts in the region by the US and Russia, each of which is determined to maintain control of the strategic resources and the way in which they are used. Moscow and Washington are well aware that the `great game' now under way in the Caspian will have a decisive impact on their ability to influence not only the countries of Central Asia and the Caucasus but also potential new allies in the Middle East, Indian sub-continent and Far East during the 21st century.
US plans, which favour the construction of a 1,700-kilometre oil pipeline running from the Azerbaijani port of Baku via Georgia to the southern Turkish port of Ceyhan on the Mediterranean, received a further boost late last year when all but three of the major players in Azerbaijan agreed to set up a company to help finance engineering studies for the link. They include BP Amoco, the operator of the Azerbaijan International Operating Company (AIOC), the consortium which is developing some of the country's most important oil and gas fields in the Caspian. …