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ENORMOUS ENERGY RESERVES
While Kazakhstan
has abundant natural resources with a total potential value estimated
at $8.7 trillion, its hydrocarbon reserves alone are vast. Existing pipelines
and transport options do not have sufficient capacity to support Kazakhstan's
potential oil reserves of 100-110 billion barrels. But for security as
well as economic and commercial reasons, Kazakhstan is committed to the
development of multiple oil export routes. The first well in Kazakhstan
was drilled by a Westerner, the British developer Alfred Nobel in 1899,
and partnership with the West has been central to energy resource development
in Kazakhstan ever since. While development of the country's enormous
oil reserves has been interrupted by two world wars, a revolution and
the dissolution of the Soviet system, this partnership has remained central
to Kazakhstan's energy equation.
Current
Status of Oil Sector: The largest onshore oil fields are Tengiz,
one of the world's 10 largest oil fields with 6-9 billion barrels of reserves,
and Karachaganak with 2.2 billion barrels. Recent seismic studies
suggest that Tengiz may have between 9 and 13.5 billion barrels of oil.
Tengizchevroil, the joint-venture consortium developing the Tengiz field,
is comprised of ChevronTexaco, ExxonMobil, KazakhOil, and LukArco.
At Karachaganak,
the Karachaganak Integrated Organization (KIO) is a consortium of ENI,
British Gas and ChevronTexaco, and manages drilling. In addition to major
oil deposits, Karachaganak also has 500 billion cubic meters of natural
gas.
The most
promising recent discovery of major hydrocarbon deposits is at offshore
Kashagan, which is three times larger than Tengiz. The consortium
developing this 2,000 square mile block 14,000 feet below the Caspian
seabed includes seven companies: ENI, British Gas, ExxonMobil, Shell,
Total Fina Elf, Phillips, and Inpex.
Halliburton
Company assists the oil majors by providing world-class oilfield services,
while the Fluor Corporation has been playing an active role in pipeline
construction in the region. Access Industries is currently pursuing a
number of oil and gas opportunities, and manages under trust a 25% equity
interest in Aktobemunaigas, a major Kazakh oil producer.
Transportation
Routes: Kazakhstan is committed to the development of multiple oil
export routes, in order to support its potential oil reserves of 100-110
billion barrels.
Atyrau-Saransk-Samara:
(Route 1 on map) This 691 km route is part of the interconnected Kazakh-Russian
pipeline system. Expansion work that started in 1999 is now under way
at a cost of $37.5 million, and once completed will enable Kazakhstan
to increase oil exports via the Russian route to 310,000 b/d, from a present
capacity of 210,000 b/d.
Caspian
Pipeline Consortium (CPC)
(Route 2 on map) The CPC was formed to build a pipeline system to transport
oil from Tengiz, western Kazakhstan, to the Black Sea at Novorossiysk,
Russia, and began to bring oil to world markets in the fall of 2001. The
CPC Project upgraded the existing line from Tengiz via Atyrau and runs
along the Caspian coast to join in the north with the Russian end of the
line. The system also consists of port facilities and a newly built line
from the northwest Caspian coast in Russia to Novorossiysk. The total
cost of the project is estimated at $2.4 billion. The completion of both
the CPC pipeline and ongoing Tengiz operations should add more than $150
billion in the combined GDP to the Russia and Kazakh economies. The CPC
pipeline will also be used for transporting natural gas liquids from a
production plant to be constructed at Karachaganak by the KIO consortium.
Aktau-Baku-Tbilisi-Ceyhan:
(Routes
3 and 4 on map) The recent discovery at Kashagan prompted plans to connect
the proposed Baku-Tbilisi-Ceyhan (BTC) pipeline with a route from the
port of Aktau on the Kazakh coast of the Caspian Sea. The entire route
would have a total length of about 2,300 kilometers, although the proposed
pipeline route would only run from Baku to Ceyhan. Kazakhstan "politically
supports" the BTC route, and proponents of the BTC pipeline believe
that the likely absence of routes through both Iran and China will probably
make this the most commercially and politically viable route for vast
reserves of Kashagan oil.
Kazakhstan-Turkmenistan-Iran:
(Route 5 on map) A proposed pipeline from Kazakhstan to Iran via Turkmenistan
has been discussed. The pipeline would have a crude capacity of 1 million
b/d, have a length of 1,600 kilometers, and require $1.2 billion in investments.
Although this route is one of the shortest and cheapest, U.S. opposition
and sanctions against Iran are likely to keep this project shelved for
some time. The destination of exported oil and gas is also another determining
factor, depending on whether it is targeted towards Asia or Europe.
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