With some analysts having calculated that the Caspian Sea holds more than 100 billion boe of oil and gas resources-depending on the volume eventually proven in the massive, shallow-water Kashagan field off Kazakhstan-dreams of a new era of offshore oil and gas production fueling the economic renewal of the region's littoral states are understandable, if, like certain dreams, somewhat Pollyannaish.
Most dreams, of course, are fleeting. Azerbaijan, for one, will have grown accustomed to turns of fortune since signing the "Contract of the Century" in 1994. The state's hopes of establishing itself as the hub of a Caspian offshore oil industry, raised and dashed regularly since by mixed exploration results, were dealt a further blow recently by news that ExxonMobil Corp. had drilled a dry hole with is first well on Oguz concession.
Add to this that TotalFinaElf SA expressed a willingness last month to pay State Oil Co. of Azerbaijan Republic $12 million to walk away from its two-well commitment on the Lenkoran-Talysh-Deniz prospect in the southern Caspian after drilling a dry hole. Further, there are unconfirmed reports that Chevron Corp. might soon admit poor results from a recent well. And Samir Sharifov, director of the Azerbaijan State Oil Fund, recently noted that hopes of an inflow of huge revenues into the state's coffers anytime soon look decidedly vain.
Still, while it waits in hope, Azer- baijan does have the BP PLC-operated Azeri-Chirag-Guneshli oil fields producing over 100,000 b/d-with reserves of over 6 billion bbl of oil and nearly 6 tcf of natural gas, as well as the giant Shah Daniz gas-condensate development as compensation.
BP, awarding the front-end engineering and design contract for Shah Daniz in June, said construction on the development could start early next year, with first flow then expected in 2004. But even Shah Daniz is waiting on various levels of government approval-along with sales and purchase agreements-to get going in earnest.
Setting to one side the contentious issue of export routes-and this remains the great bogeyman haunting the landlocked offshore province-the northern reaches of the Caspian Sea are now challenging for the position of frontrunner in the race to fulfill the region's promise. And with good reason.
That reason is Kashagan. Though Domenico Spada, E&P vice-president in the region at ENI SPA-the company heading up the field development's operating consortium-will disclose no more on the discovery's size than has been reported, Kashagan could hold as much as 60 billion bbl of oil, by some unofficial estimates. Even at the low end of these estimates, around 25 billion bbl, this field gives credence to the North Caspian claims of ascendancy.
And this, Spada hopes, might not even be the best of it-if ENI's current plans to size up the fuller dimensions of the area's oil and gas structures pan out.
Drilling at the field, where two exploration wells have been spudded and the first of five appraisal wells is under way, will continue through 2003, with a second drilling unit joining the Sunkar rig presently operating on the 11-block production-sharing contract area. First flow, under Spada's accelerated development plan, is set for 2005.
Some dreams in the Caspian may yet come true.