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. Last Updated: 07/27/2016

Kazakhstan Reports Big Caspian Oil Find




ATYRAU, Kazakhstan -- Kazakhstan Prime Minister Kasymzhomart Tokayev said Wednesday that an international consortium test drilling on the Caspian shelf had found major deposits of oil.


"The [East Kashagan] structure promises to be an abundant one, that is, we are talking about big deposits of oil," Tokayev told reporters in the western port of Atyrau after returning from the drilling platform.


Senior officials have said recently that early test results from the site were positive, but Tokayev specified that it was oil that lay in the shallow waters close to the Kazakh coast, boosting the prospects of production from the field.


A find of gas or gas condensates would be less positive for Kazakhstan and the Caspian region because new export pipelines being built and planned are mainly designed to transport oil, not gas, to hard-currency markets in the West.


The East Kashagan structure is being explored by the Offshore Kazakhstan International Operating Co., or OKIOC, which groups some of the world's largest multinationals.


Seismic research has shown that the structure could be one of the largest undiscovered oil deposits in the world, dwarfing Kazakhstan's onshore Tengiz field, which conservative estimates say contains 6 billion to 9 billion barrels of oil. Initial estimates have put reserves as high as 4 billion metric tons or nearly 30 billion barrels, although Tokayev said Wednesday it was too early to give a detailed estimate of recoverable reserves. He added OKIOC planned to make an official announcement in mid-August.


Plans by OKIOC to extend the existing exploration well to 5,000 meters from its current depth of 4,500 meters would probably be approved by the government, he said.


"We are confident and are striving toward Kazakhstan becoming the owner of major volumes of oil," Tokayev said. "We have no doubts about this."


President Nursultan Nazarbayev said last month that the vast Central Asian state may rival Saudi Arabia, the world's largest oil producer, by 2015, by which time it could be producing 400 million tons a year from 1999's 27 million tons.


Exports and production are being held back mainly by the lack of export capacity to world markets. Billions of dollars of investment are needed to open up new transportation routes and broaden the search for reserves.


The possibility of a big find off Kazakhstan's Caspian coast has created intense interest among countries vying for control over strategic pipeline routes that oil executives say will soon be needed to handle growing volumes of hydrocarbons.


Iran last month said it wanted a new pipeline to run from the west coast of Kazakhstan to the Persian Gulf across its territory, while the United States wants any OKIOC oil to pass west across the Caspian and feed into a line running to Turkey. The east-west corridor is favored by Washington because it bypasses both Iran to the south and Russia to the north.


Russia and Kazakhstan are already constructing a 1,500-kilometer oil pipeline running from Tengiz to the Black Sea oil outlet of Novorossiisk.


Turkey, Azerbaijan and Georgia finished the legal framework Tuesday for a pipeline project to transport oil from the Caspian Sea to the Mediterranean Sea, skirting Russia and Iran. The countries now need to seek approval from their parliaments and to look for resources to finance the estimated $2.4 billion pipeline, The Associated Press reported.


OKIOC unites Philips Petroleum and Exxon Mobil of the United States, Italy's Agip, Britain's BG PLC, BP Amoco and Royal Dutch/Shell, Japan's Inpex, TotalFina of France and Norway's Statoil.