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Kazakhstan: Down A Difficult Road To Mineral Riches

By Merhat Sharipzahn

Almaty, 13 November 1996 (RFE/RL) -- The oil consortium known as KazakhstanKaspiyShelf has finished a major survey aimed at identifying the mineral wealth on the Caspian Sea's shelf off.

Our correspondent in Almaty quotes Kazakh officials as saying the results of the research indicate there are at least 5,500 million tons of crude oil and 2 million million (trillion) tons of natural gas on the Kazakhstani side of the Caspian. In all, hydrocarbons have now been found at 160 spots in that area.

Present plans call for drilling of undersea wells to start in 1998-99. By the year 2004, production is envisaged at up to 5 millions tons of oil annually on Kazakhstani side of the Caspian Sea. And by 2013, it's hoped that the total quantity of crude oil produced in that area will be 60 million tons a year.

However, turning these plans into reality poses a technical challenge. Kazakhstan -- in any case not a big traditional oil producer -- has never previously been involved in winning crude from offshore oilfields. There is no pool of local experience in undersea oil extaction, and the required technologies, infrastructure and expertise are lacking.

To define and help solve the technical and logistical problems, the KazakhstanKaspiyShelf consortium, which comprises local and western interests, hired the American company McDermott as consultants.

The aim is to produce the most oil for the least money, oil being by far the most important of of Kazakhstan's few exportable resources. It's estimated that to get production up to even the 5 million ton annual level by early next century will cost almost $23 billion. The total development costs of the project are estimated at about $150 billion.

Our correspondent says the consortium wants to use as much standard, low cost technology as possible, preferably of Russian origin, as Kazakhs are already familiar with this sort of equipment.

By way of tackling the problem, McDermott divided the Kazakhstani sector of the Caspian into two parts, namely the Northern Zone, where the sea's depth is only about 10 meters, and the Southern Zone, where the the depth is 100 to 500 meters.

Two coastal bases are envisaged, one of them at Atirau city, another one at Bautino town, which is situated on Tyub-Karaghan Gulf's shore.

It's planned to extract oil from the shallow Northern Zone by using standard technology incorporating as much on-shore equipment as possible. The oil from this zone will reportedly be transported by tanker, and through Soviet era pipelines to Atirau or the Tengiz oil complex. As for the much deeper Southern Zone, standard techniques will probably suffice also, but the main problem here is an absence of technology and facilities for the construction of the necessary offshore equipment.

Kazakh officials say McDermott stressed the possibility of building the necessary specialised equipment on the other side of the Caspian, on the Russian and Azerbaijani coasts, where the expertise in oil rigs is readily available. If a decision is made to proceed with construction on the Kazakh side, then greater difficulties are expected.