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. Last Updated: 07/27/2016

OKIOC Strikes Oil Again in Caspian Sea

ALMATY, Kazakhstan — An international consortium of oil companies drilling in the Caspian Sea reported Wednesday that it had struck oil in the second of two wells it has drilled in the giant Kashagan field near Kazakhstan.

A spokesman for the Offshore Kazakhstan International Operating Co., speaking from the western Kazakh town of Atyrau, said the well was located 40 kilometers northwest of the first well, where drillers hit oil last July.

The find boosted speculation that the 80-kilometer by 25-kilometer field may be capable of producing 2 million barrels a day in 15 years. It would be the fifth-largest oil field in the world and the only one among the top five outside the Persian Gulf.

"This confirms the general expectation that Kashagan is a truly major oil discovery," said Alexander Lesser, an American lawyer in Almaty who represents oil companies.

According to the announcement, made by ENI SpA, the Italian oil company that is the operator of the field for OKIOC, oil was found at a depth of 4,982 meters below ground, just 200 meters less than at the first well, which was drilled in the eastern part of the structure.

The announcement said it was "too early to comment on the characteristics of the hydrocarbons found" and that "further information will only be available upon completion of the testing program."

But oil executives involved in the drilling confirmed that the hydrocarbons were oil and that it appeared to be of the same quality as that found at the other drilling site: high-pressure light crude with 15 percent or so content of sulfur.

Following completion of the testing, the giant Sunkar drilling rig will return to the area of the first hole in order to drill another half-dozen wells as part of what is called the appraisal stage.

In some 18 months or so, when these wells are drilled, ENI and its partners in OKIOC will decide on a program — expected to cost $20 billion over 15 years — to develop the giant field.

The world's largest oil field development program of the coming decade will range from the construction of plants to separate the gas, the oil and the sulfur, to the extension of the port of Aktau on the Caspian. Agreements to build pipelines also need to be made to bring the oil to world markets from a planned 200 wells.

The oil strike comes at a time when momentum is building for the construction of a pipeline from Baku, Azerbaijan, to Ceyhan on Turkey's Mediterranean coast.

The United States has been strongly lobbying for the pipeline, which would allow the former Soviet republics of Kazakhstan and Azerbaijan to export their oil wealth without having to depend on Russia or Iran. Before a pipeline is built, Kashagan oil is expected to be barged across the Caspian, with an undersea trans-Caspian pipeline to follow.

This past week, President Mohammad Khatami of Iran met with his Russian counterpart, Vladimir Putin, in Moscow and both reaffirmed their opposition to the pipeline, calling it an environmental threat.