Matzke says Caspian needs time and focus on essentials
Richard H. Matzke, president of Chevron Overseas Petroleum has said that the Caspian oil industry needs to re-focus
on fundamentals and see to its commercial priorities.
Matzke said that the long-awaited approval of the $ 2.2 billion Caspian Pipeline project by the Russian federal government is imminent.
This was underscored by Viktor Fedotov, director general of the Caspian Pipeline Consortium, who said, "All technical issues have now been settled with the expert review bodies."
Dismissing early reports of Caspian exploration failures, Matzke cited a serious shortage of offshore drilling rigs
and said, "The oil industry has barely begun to explore the Caspian. The eager outside world will have to accept that
it's going to take quite a while to find out what's down there. None of the prime offshore areas of the world have
revealed their oil and gas treasures in just a few years or a few wells."
Premature judgements on exploration, said Matzke, can be blamed partly on widely publicised estimates of Caspian oil reserves in the hundreds of billions of barrels. The same estimates also fanned the flames of speculation about big new regional pipelines, he said: "Although multiple pipelines are needed, now that times are tougher in the oil business, any pipeline that can't be commercially justified is going to have a hard time finding friends with money. We're very pleased that CPC will be the next pipeline in the logical development of the region's infrastructure."
Low oil prices are a "serious situation," said Matzke. But he added, "It's essential to recognise that in 1998, for the first time, oil prices became as important as oil politics in the Caspian. And in fact, this has helped the industry to re-focus on fundamentals.
Isolation on the world map can not provide insulation from world oil market trends or global investment requirements.
During the year, as the value of barrels dropped in the Caspian, the value of efficient operations increased.
"Personally, I think it's healthy that the Caspian oil industry is coming back to fundamentals and focusing on the serious commercial priorities of the next two to three years. We need to cooperate regionally to build an industry which will be competitive globally in the long term."