Excited speculation raged Saturday that Kazakhstan was sitting atop one of the largest oil fields in the world, but oil majors and experts cautioned it was premature to make concrete size estimates yet.
"It is the early days, we have drilled one well and are drilling another and there are all sorts of estimates out there, we just don't know," a London-based British Petroleum spokesman said.
He spoke following disclosures that French oil giant TotalFinaElf was eyeing British Petroleum's 9.5-percent stake in the OKIOC consortium, which exploring the potentially huge Kashagan oil field.
The acquisition would give Total the largest stake in the nine-member consortium and boost its chances of being elected as the single operator of the Offshore Kazakhstan International Operating Company (OKIOC).
Total, Shell and Exxomobil are all said to be vying for operations control. The East Kashagan field, which lies some 75 kilometers (45 miles) offshore, southeast of Atyrau, is attracting increasing attention as expectations mount about the size of its reserves.
Kazakh officials have pegged reserves at up to 50 billion barrels of crude, while President Nursultan Nazarbayev predicted his country would rival the world's leading oil producer, Saudi Arabia, in output by 2015.
Unofficial estimates have posited the size of reserves at around 25 billion to 50 billion barrels with some 10 percent to 50 percent of this recoverable.
Experts and the consortium members, however, are much more cautious. "It looks like a promising discovery but there is a long way to go yet," a Shell spokesman said.
"I think we have to wait for the full analysis of the drilling program," said Julian Lee, senior energy analyst with Global Energy Studies.
"At the moment it is based on the results of one well and any claim to have discovered a vast oil field based on one well is premature," he added.
Experts also warn that the field is unlikely to be easy to develop and that its development could be complicated by high water pressure, the sensitive natural environment of the Caspian Sea and icy winter conditions.
They suggest Kazakhstan could be interested in talking up the field to increase its bargaining position with other companies coming to Kazakhstan.
It could also strengthen the country's hand in a battle for influence in the Central Asian region being waged by countries including Russia, the United States and Iran.
They are each pushing various pipeline options to transport crude from landlocked Kazakhstan to world markets.
The companies, meanwhile, wish to avoid overstating the reserves too quickly, fearing the Kazakh government may seek to renegotiate its contract or put pressure on them to speed up the production of first oil, analysts say.
"The government is bound to be extremely optimistic and the companies are bound to be less so and the truth is probably somewhere in the middle," said Lee.
OKIOC completed drilling at the first exploration well in the 75-kilometer long structure last August and is now drilling some 40 kilometers away at West Kashagan.
It does not expect to be able to give a reliable estimate as to the size of the reserves until the appraisal phase is over in late 2002.
Kazakhstan wants production of the first oil by 2005.
TotalFinaElf, Shell, ExxonMobil, ENI and British Gas each own 14.3 percent of OKIOC while Inpex of Japan and Phillips Petroleum each own 7.1 percent and Statoil of Norway 4.8 percent.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)
