Kazakhs Hail New Caspian Oil Field

ATYRAU, Kazakhstan -- Kazakh President Nursultan Nazarbayev on Wednesday announced the discovery of an enormous Caspian Sea oil field that could turn out to be the world's largest offshore oil find.

"I can tell you today that there is oil, big oil, and it is good quality oil," Nazarbayev told reporters after visiting the Sunkar drilling platform 75 kilometers off the Kazakh Caspian Sea coast. He said the find would put Kazakhstan among the world's five largest holders of energy resources.

The head of Kazakhoil, the state oil company, had said earlier that the offshore Kashagan oil field held oil and gas reserves of more than 50 billion barrels. If correct, this would make it one of the largest oil fields ever discovered. Saudi Arabia's Ghawar field, the largest onshore field in the world, has remaining reserves of 70 billion barrels, while its Safaniya field, the world's largest offshore field, has 19 billion barrels.

"It is our good luck that the first oil has been found, proving the potential energy wealth of the region," Nazarbayev said. "This field has six times more oil than the next largest field in Kazakhstan, Tengiz. And I am telling you just the pessimistic figures."

"We can say with confidence that we are on the verge of the largest oil and gas discovery in the world over the past 30 years," Kazakhoil president Nurlan Balgimbayev told reporters. "Expert estimates put reserves at the Kashagan field at over 7 billion metric tons, which allows us to believe that in the future oil output at Kashagan could be more than 100 million tons a year," he said.

He was giving a figure for total Kashagan reserves but made no estimate of the volume of commercially recoverable reserves.

The find appears to dwarf Russian major LUKoil's find earlier this year some 350 kilometers south of Astrakhan.

That deposit harbors an estimated 2.2 billion barrels of extractable crude reserves f an amount roughly equal to half of Britain's total recoverable reserves f excited LUKoil officials proclaimed in March.

LUKoil officials said at the time that the find f which looks to be about a tenth the size at best of Kazakhstan's estimates for Kashagan f would create 100,000 new jobs.

However, while Kazakh officials were jubilant Tuesday, the consortium exploring the field, the Offshore Kazakhstan International Operating Co. was much more cautious.

"At the moment, we do not feel we have sufficient information to make any estimates on potential reserves," said an OKIOC spokesman in response to Balgimbayev's remarks. OKIOC unites Phillips Petroleum, BP Amoco, Agip, BG PLC, Royal Dutch Shell, ExxonMobil Totalfina, Statoil and Japan's Inpex.

Earlier Tuesday, Tokyo newspaper Yomiuri Shimbun reported the OKIOC consortium had discovered estimated recoverable reserves of at least 15 billion to 20 billion barrels of oil off the shores of the Caspian Sea in Kazakhstan.

Quoting unnamed industry sources, the paper said the Kashagan discovery amounted to one of the world's five largest oil fields.

Production is expected to start in 2004 and after 2010 is expected to hit an average of 1 million barrels per day, the paper said. A firm affiliated with Japan's Indonesia Petroleum Ltd. is a member of OKIOC.

A spokesman for Japan National Oil Corp. said he was unable to confirm the report. State-run Japan National Oil also has an interest in the affiliated firm.

The Japan National Oil spokesman said he had heard that drilling and other tests would be completed this month, with a possible announcement on the results of the find next month.

Japan has a 7 percent stake in the OKIOC project, or about 70,000 bpd of the crude oil once production has hit its peak, the newspaper said.

OKIOC plans to make an announcement at the end of July, said the consortium spokesman, after further testing.

He said OKIOC had found oil dur ing the logging of test results but warned that not much of the structure had yet been explored.

"We have one hole in a structure that is 75 kilometers long. In the event of a discovery, we need more information from an appraisal drilling program to say what could be contained in the Kashagan structure."