Kashagan accounts for large share of last year's oil discoveries

Jul 17, 2001 02:00 AM

Kashagan, an offshore field in Kazakhstan's section of the Caspian Sea, had accounted for a large share of the oil discovered through wildcat drilling in the year 2000.
Provisional figures indicate that wildcat drilling resulted in the discovery of 14.3 bn barrels of oil last year, the group said. Of the total, the eastern section of the Kashagan field accounted for 6.4 bn barrels in recoverable reserves as of the date of publication of IHS' World Petroleum Trends Report 2001 (WPT).
The Offshore Kazakhstan International Operating Company (OKIOC), which is developing Kashagan, has stated in light of subsequent drilling at the western section that the field's proven reserves amount to 10 bn barrels of oil, the press release said. If this figure is confirmed, it added, Kashagan will help make 2000 the biggest year for discovery of liquid hydrocarbon reserves since 1991, when large deposits of gas condensate were discovered at Iran's offshore South Pars field.

IHS also noted that Kashagan had accounted for a significant share of the total 87 tcf of gas discovered via wildcat drilling last year. It did not provide a specific figure for gas reserves at Kashagan but stated that reserve estimates were likely to rise as a result of drilling at the western section of the Kazakhstani field.
OKIOC has yet to release an official report on the results of test drilling at Kashagan and has declined to make an official estimate on the size of its concession. It has confirmed, though, that oil was discovered oil in both of the test wells completed at Kashagan. (The group began work on its third test shaft in late May and expects to begin receiving data from the well next month.)
Meanwhile, other sources -- including OKIOC members and Kazakhstani government officials -- have given out figures ranging up to 50 bn barrels in total reserves (with recoverable reserves ranging from 10 % to 50 % of the total). Most industry experts believe that the Kashagan field contains somewhere between 5 bn tons and 12bn tons in recoverable reserves.

Since the oil found at Vostochny Kashagan does appear to contain high concentrations of sulphur and associated natural gas, development of the field is likely to be difficult. Nevertheless, Kazakhstani President Nursultan Nazarbayev has said that OKIOC's concession will probably hold enough oil to boost the Central Asian country's crude output up from the present level of 615,000 bpd to about 8 mm bpd, a figure comparable to that of Saudi Arabia. However, a number of analysts have downplayed the more optimistic reports about Kashagan, stressing that it is too early to assume the project will be lucrative.
The OKIOC consortium was set up on the basis of a consortium established to survey the offshore deposits in the Kazakhstani sector of the Caspian Sea. This survey group, known as Kazakhstancaspiishelf or KCS, was split between Agip, British Gas (BG), British Petroleum (now BP) and its Norwegian partner Statoil, Mobil of the United States (now ExxonMobil), Shell and Total of France (now TotalFinaElf) as well as a Kazakhstani state company, also called KCS. OKIOC was given the right to select 12 of the fields surveyed by the KCS consortium before the rest of the blocks were offered to other investors. Kazakhstan then sold its interest in OKIOC to Phillips Petroleum of the United States and Inpex of Japan in September of 1998.

At present, TotalFinaElf holds a 14.28 % share in OKIOC, while BP holds 9.52 % and Statoil holds 4.76 %. The remaining equity in the consortium is split as follows: 14.3 % each to Agip, BG, ExxonMobil and Shell; and 7.1 % each to Inpex and Phillips. ENI, Agip's parent company, was appointed as the group's operator in February of this year.

Source: NewsBase
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