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Caspian Sea: U.S. Experts Say Oil Reserves Are Huge

  • Charles Fenyvesi

Washington, 5 May 1998 (RFE/RL) -- U.S. Energy Department experts say they are skeptical of a recent British report suggesting that Caspian oil reserves may be dramatically lower than commonly accepted estimates.

Speaking on the condition of remaining anonymous, the experts maintain that the U.S. has firm evidence that the Caspian Sea region is one of the world's most promising sources of oil and gas, roughly comparable to what lies under the sands of Saudi Arabia.

American experts in and out of the government strongly doubt the report last week by the respected "Strategic Survey," published annually by the London-based International Institute for Strategic Studies. It argued that the American estimate inflated the figure of Caspian oil reserves dramatically, by a factor of up to eight.

Some of the Americans go as far as suggesting that the report might have been motivated by a desire to discourage potential investors in further oil exploration and pipeline construction in the region.

But one American academic expert suggests that the London report is simply erroneous, with the authors confusing U.S. estimates for proven reserves, which are between 20 and 36 million barrels, with potential reserves, which may be up to 200 million barrels. "We know what we are talking about," the expert said. "We do have some specific knowledge to start with. I wonder where those London people went for their facts."

The U.S. Energy Department has estimated the Caspian region's potential recoverable oil reserves as up to 200 billion barrels, or about 16 percent of the world's reserves. To transport the oil (and gas) to Western markets, the U.S. supports multiple pipelines, including a Eurasian link, running under the Caspian from Turkmenistan, then from Baku, Azerbaijan, to the Mediterranean port of Ceyhan, Turkey. That pipeline project, which the U.S. says would avoid sending more oil through the already clogged Bosporus straits, could take ten years to complete. Turkmenistan President Saparmurat Niyazov last week signed an agreement with the U.S. to fund a feasibility study of the potential route.

However, Russians consider the pipeline as an intrusion of Western influence in a region which was once under their political and economic control. Last week, the Moscow business newspaper Kommersant Daily argued that Niyazov's agreeing to the feasibility study represents the "cornerstone of the U.S. plan" to prevent the reintegration of the Commonwealth of Independent States and to draw Central Asia and the Transcaucasus into the U.S. sphere.

The official Russian position is that the Baku-Ceyhan pipeline will prove too expensive to build and that it would be far more economical to make use of the existing pipeline which goes through Russia. U.S. officials, including Energy Secretary Federico Pena and Commerce Department counselor and ombudsman for oil and gas in the former Soviet republics, Jan Kalicki, have repeatedly voiced support for the Russian line as important to the multiple route approach.

They also argue that any pipelines must be commercially viable and constructed by private oil companies.

An American geologist familiar with the Caspian Basin recalls that the current optimistic U.S. government estimate of Caspian oil deposits dates back to the mid-1980s when the Soviet Union made similar grand claims about the wealth of a region which was then its territory. At that time, the American geologist says, the Soviets deliberately exaggerated the value of all their natural resources, and came up with some wild claims no one in the know took seriously. We knew that the Soviet study of Caspian oil deposits was worthless, partly because the Soviets did not have the capability to make an accurate estimate," says one U.S. official familiar with the history of such estimates. "For instance, the Soviets had the equipment to probe for oil only in the shallow waters of the Caspian coast. They had no way of judging, as we do, what lies thousands of feet deep. Besides, their estimate, regardless of its motivation, was way below what we knew reflected reality. Unlike the Russians, we have access to the increasingly sophisticated technology that can tell us what resources lie underneath the surface."

Nevertheless, a petroleum geologist working for the U.S. Geological Survey (USGS), an independent government agency, argues that because of American commercial interests, the USGS ought to undertake an official study of the Caspian energy reserves. "An impartial, independent study would be useful," he says. "Economic and political considerations can twist estimates by oil companies and governments (but) USGS could go out there and set the record straight."

The geologist, who asked not to be publicly identified, said, however, that he does not think that such a completely independent study will happen. "There is too much money and politics involved here," he says. "People don't want the plain facts."