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. Last Updated: 07/27/2016

Kazakh Consortium Announces Oil Find

The nine-member Offshore Kazakhstan International Operating Company consortium announced Monday that it had struck oil at the Kashagan East well off Kazakhstan's Caspian coast, breaking its silence over what local officials have called one of the world's biggest fields.

OKIOC said the full appraisal phase would probably last until late 2002, by which time the group could give a reliable estimate as to how much crude lies beneath its acreage of the shelf.

Expectations have been rising after Kazakhstan, desperate for a massive find to put it on the map as a major oil producer of the future, made a series of early announcements pegging oil and gas reserves at up to 50 billion barrels.

If correct, this would place the Kashagan structure second only to Saudi Arabia's onshore Ghawar field, with remaining reserves of 70 billion barrels while Saudi Arabia's Safaniya field, the largest offshore deposit, has 19 billion barrels.

OKIOC continued to urge caution Monday. "We have drilled just one well in a big structure," said OKIOC spokesman Matthew Bateson by telephone from Almaty, Kazakhstan. "We have another well planned under the exploration program and then plan to move to an appraisal program."

Early results were "encouraging," both in terms of rate flows and the quality of the oil coming to the surface.

An OKIOC statement said the first well had tested at 600 cubic meters of oil per day and 200,000 cubic meters of gas per day.

Drilling at Kashagan West, a second exploration location 40 kilometers from Kashagan East, would begin in the fourth quarter of the year, OKIOC said.

Kashagan East lies 75 kilometers southeast of Atyrau on the Kazakh coast and was drilled in just 3 meters of water to a depth of nearly 5,200 meters.

A major discovery could put the Caspian back on the map of Western oil firms, whose interest in the landlocked sea has flagged in recent years due to low oil prices, high transportation costs and legal disputes between littoral states.

The United States wants Kazakhstan to pledge OKIOC oil to the planned oil pipeline from Baku in Azerbaijan to Turkey's Mediterranean oil outlet of Ceyhan, possibly via a new pipeline across the Caspian Sea, as it would reduce the influence of Russia and Iran over the strategic basin.

Tehran has made an aggressive play for OKIOC oil to run south via Iran, while Moscow is likely to try to secure any flow of offshore production across its territory.

OKIOC is a venture between Philips Petroleum, BP Amoco, Agip, BG PLC, Royal Dutch/Shell, ExxonMobil, Totalfina, Statoil and Japan's Inpex.