Oil is discovered, what's next?

It is quite a lot, although more was expected. Nevertheless, the most important moment of the Caspian oil history, starting in 1993 from the establishment of the consortium of Western companies and a Kazakhstani one for the exploration of hydrocarbon resources has been completed positively in general. The availability of oil reserves that were known to the Soviet geologists, was successfully confirmed, but the main thing - their commercial reserves were confirmed as well. Now the second stage has to be initiated, the development of these resources.

Technologically it's difficult, but solvable. The necessary equipment will obviously be ordered in Western Europe, most likely in Italy, taking into consideration that the consortium's operator is an Italian company. It can be transported to the North of Caspian Sea, through Black Sea, then through the Russian channel system Volga - Don. A more difficult problem is an answer to the question, where the oil, produced at Kashagan should be forwarded. There are several versions of the reply to this. First one is the usage of the CPC pipeline. However, by the time when Kashagan starts to be developed, the other projects must be activated as well. Thus, JV "Tenghizshevroil" must increase its production volumes at Tenghiz field, which will give up its first place as the largest field to Kashagan. Also the gas condensate from Karachaganak field will start being pumped through the CPC. If the oil prices will remain high, then the other, old, fields in West Kazakhstan will be developed more intensely. All this oil will be too much with the existing CPC capacities of 28 million tons. Of course, this problem will be resolved when the second turn of the oil pipeline is built, but for now there's a lot of talk, while the real operations have not started. And the beginning of Kashagan's industrial development is planned after three years; if the current situation persists the big oil from the shelf will encounter a problem of transportation to the external market. The fact that there are a lot of projects, associated with separate countries and directions, does not change anything. The majority of these projects are in fact mere ideas, as there is no serious development to them, while some of them are just projects, linked to various political or geopolitical ambitions. It can be said that in the nearest five years there won't be new oil pipelines, which would be alternative to the existing ones. Carrying oil in big quantities by tankers to Baku is complicated, expensive and environmentally dangerous. Moreover, after the last precedent with the tanker's crash near Azerbaijani shores. The most promising direction of the oil pipeline construction is still the so-called Southern one, i.e. towards Iran. But the position of USA, whose positions in Central Asia become stronger each day, in this regard is well known. It's unlikely that anybody would want to invest big money into an infrastructure facility construction on the territory of a country, which Washington declared a part of "the axis of evil" and it is suggested, that some day they'll start to "break" this axis. Thus the problem of Kashagan oil transportation to the market is very difficult and after the announcement of the commercial reserves it didn't become simpler.

Another problem is ecology. There is no less talk about it, than about pipelines, but we can't say that this abundance influenced in some way the Caspian situation. We have to give their due first to OKIOC consortium, then to "AGIP Caspian Sea", which really bothered about minimisation of their operations' impact on the environment. But when the industrial development of the shelf fields starts, the scope of these operations will multiply significantly and this means a risk for the ecological situation. Moreover, there will be a completely new problem of the delivery of produced oil from the sea wells onshore. And if the oil is sour crude, as at Tenghiz, it'll have to be refined from sulfur. These are new problems for the region, which is not really well-off regarding ecology. First of all there is people's health and then the ecological problem deals directly with the second basis of the coastal provinces of Kazakhstan - fish industry. Probably, all these problems, theoretical as yet, need to be analysed scrupulously. And the announcement of the commercial reserves discovery at Kashagan must not immerse us into euphoria, but on the contrary, make us think about the future.