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. Last Updated: 07/27/2016

Huge Oil Find Renews Excitement in Caspian

LONDON -- Royal Dutch/Shell said Thursday much work was necessary to establish the commercial promise of a Kazakh oil discovery, widely seen as one of the industry's most exciting.

"This is going to be a large venture that will be with us for many years," exploration and production chief Phil Watts said of the Kashagan find at a news briefing.

"This was the largest undrilled structure in the world that was remaining and that was known about. We have one well that is currently completing testing. The next well is more than 50 kilometers away, which gives you an idea of the scale."

"It's obviously a very large find, but we have to do a lot of appraisal and exploration in the area just to confirm the significance of it. It's not just the volume but also what is realistically the technical cost and the ultimate profitability."

The nine-member Offshore Kazakhstan International Operating Co. that found the structure says full appraisal will probably last until late 2002 when the group could give a reliable estimate as to how much crude the field holds.

OKIOC unites Phillips Petroleum, BP, Agip, BG PLC, Royal Dutch/Shell, ExxonMobil, Totalfina, Statoil and Japan's Inpex.

Watts was attending a briefing about a near doubling of Shell's second quarter worldwide profits to $3.15 billion on an adjusted current cost of earnings basis.

Kazakh officials have said the field may contain tens of billions of barrels of recoverable oil, which, if true, could put the Caspian back on the map of Western oil companies whose interest in the landlocked sea has flagged recently.

But Kashagan was not on a list of major upstream projects that Shell said on Thursday would help drive its planned 5 percent a year growth in production between 1999-2004.

The projects included Nigeria's deepwater Bonga field, the North Sea's Shearwater and Triton fields, the Philippines Malampaya gas venture and the Soroush and Nowruz offshore fields in Iran.

"These significant additional projects make us confident that we will be able to deliver that growth of 5 percent net of divestment effects," chairman Mark Moody-Stuart said. "If you added the divestments back in, it would be 6.5 percent."

Moody-Stuart said Shell's finding and development costs were the lowest of any publicly quoted oil company, at under $3 a barrel of oil equivalent.