European pressure on European companies

This logical and understandable thought was also confirmed during the recent visit of Mrs. Benita Ferrero-Waldnder, EC Commissioner for External Relations and the European Neighbourhood Policy, to Kazakhstan. It is a double pleasure for Kazakhstan. And there is an external positive factor - the fact that the European Union, one of the biggest entities in the modern world economy, is paying attention to us. An internal positive factor is that this interest can enhance development of the energy sector in Kazakhstan.

This interest is coming on top of agenda, which has been confirmed this month in Almaty at the last Kazakhstani International Oil & Gas Exhibition (KIOGE). There, apart from traditional mentioning of the past years' achievements, big plans and ambitions, also figures and assessments were expressed that pointed out to serious problems.

For instance, the oil and gas condensate production forecasts based on the results of this year show that the triumphant growth of the last ten years is being slowed down.

In 2006 the advantage will be relatively small. The fields operated by the National Company "KazMunaiGaz" are as a rule old and developed to a big extent and even with the help of new technologies any significant intensification of the oil production growth is unlikely.

Tengiz should produce a lot after the completion of the so called second generation project, but those will not be the volumes about which so much was said during the last few years. Let us remember that the oil production level in 2010 was expected to reach 100 million tonnes and by 2015 - 150 million. Moreover, if we cast a glance to earlier forecasts made in the 1990-s, certain individuals were speaking even about 400 million tonnes, well, these huge ambitions have already been disavowed.

Really big hopes can be related only with the beginning of Kashagan development. But is is continuously postponed. Therefore some statements made at the KIOGE have become the main event of this month.

Actually another, new postponement of the beginning of the oil production at Kashagan at the Caspian Sea shelf were discussed. Now, according to the assessments, the first oil at Kashagan will be extracted not earlier than in the beginning of the second decade.

A representative of a company operating the project in his speech at the KIOGE avoided the theme of the drilling terms. Such issues were always stated by Kazakhstani officials first and only then others were starting to speak about new terms…

It is still unclear why this project is being delayed year after year. Everybody, both our own and foreign commentators of the problem explain it by complicated environmental and geological characteristics of the field. They speak about the high sulfur content at Kashagan, the big pressure, sometimes about the depth at which the resources lay. They also mention cold winters and hot summers. Well, everything happens, but the fact that there is nothing new about it all cannot be ignored!

Absolutely all problems had been expressed before the first drilling date was assigned and after that when the date was postponed. If Kashagan developers are each time receiving some new information about the difficulties at Kashagan, where we can get guarantees that it will not happen again and again? Maybe, it all is not simply about the cold, heat, and sulfur, but about some other reasons, such as, for instance, errors in the designs or a growth costs in comparison with the originally planned ones?

The two themes that are not very much related between each other at a first glance, - Kashagan and the interest in energy supplies from Kazakhstan shown by Mrs. Ferrero-Waldner, - are actually very close.

In this situation it is the serious political interest of Europe that can speed up Kashagan development, in which European companies participate. The EC commissioners in the first place must demonstrate their interest in the energy supplies from Kazakhstan. It cannot be that Astana is against it!

On the contrary, the government of Kazakhstan is interested in speeding up these processes: if the project does not start working at the peak of the world oil prices, will it work afterwards? After their possible long time fall? The European companies, in any case, even if they do not gain too much from that, are also unlikely to lose too much either.

It is different with Kazakhstan: strategic issued of the future country development are "tied" to the oil export, which in its turn is tied to Kashagan and then to the shelf.

So is it the official Brussels that should "push" the European companies participating in this big Caspian project? Yes, if Europeans are really waiting for big inflows of oil and gas into their economies.

Photo from http://www.axisglobe.com - EC Commissioner Benita Ferrero-Waldnder