Face wrapped in a thick scarf against clouds of blinding dust, the electrician gazed at a maze of pipes and pumps teeming with 15,000 workers and compared his work to building the Tower of Babel.
He was speaking casually. But for the oil industry Kashagan, the world’s biggest discovery since 1968 with reserves locked amid lethal, high-pressure gases beneath the north Caspian Sea, is a challenge of biblical proportions.
“There are people from 30 different countries working here,” said electrician Leonid, asking not to be identified because he was not authorized to speak to the media. “But we do try to find a common language.”
PHOTO: REUTERS
Kashagan, developed by oil majors including Eni and Exxon Mobil, represents all the challenges Western countries face to secure energy supplies as Asia becomes more energy-hungry and Russia seeks to dominate resources on its borders.
The field’s difficult geology, remote location, harsh climate and environmental challenges make it one of the world’s most complex and, at US$136 billion so far, expensive energy projects.
As state-owned companies now control most global reserves, Kashagan shows how Western majors that once dominated the industry now have to take what chances they can to produce oil.
With an estimated 9 billion barrels of recoverable oil, Kashagan is an almighty undertaking.
In temperature swings from minus 40ºC to plus 40ºC, the oil in the Kazakh field is heavy in sulphur — a hazard to health and the environment.
“It’s a project of immense difficulty,” said Eduard Poletayev, an independent analyst who closely watches Kashagan.
Due onstream in three years, Kashagan is one of a dwindling group of giant oilfields as cheaper and more accessible sources dry up. Only 11 such giant fields were found in the 1990s, down from 29 in the 1960s, investment bank Simmons & Co said.
“All the big oilfields have now been gobbled up and Kashagan is the last pearl in the crown of the world oil industry. That’s why oil companies are fighting for it so stubbornly,” Poletayev said.
Expected to produce the equivalent of 10 percent of Europe’s energy needs once at the height of its production, Kashagan can make Kazakhstan a new global source of non-OPEC energy.
It is at the heart of a tussle between Russia, China and Europe, reflecting the challenges faced by the West in maintaining its place as the market of choice for oil producers, and Europe’s battle to reduce its reliance on Russia for energy.
The main question is where the oil will go.
One option is to ship it by tanker across the Caspian Sea to the Baku-Tbilisi-Ceyhan oil pipeline that runs to Europe. BP leads that pipeline, but is not a partner in Kashagan.
Such a route is likely to irritate Russia: Moscow wants to boost its role as Europe’s leading energy supplier by persuading operators to feed the oil into a separate, Russia-bound line run by the Caspian Pipeline Consortium, for transit to Europe.
But the oil could also flow east to energy-hungry China, or — a more controversial possibility — to southern markets via Iran. No single operator holds a deciding majority.
The consortium’s media department in Kazakhstan said it could not comment on possible export routes.
“Kashagan isn’t producing any oil yet so they are being very careful,” Poletayev said. “Because otherwise it’s like selling the bear’s skin before the bear has been caught.”
An hour’s helicopter flight over the emerald green waters of the north Caspian reveals a field of magnificent proportion.
Forming the heart of drilling operations is a scattering of artificial islands encircled by huge man-made reefs designed to prevent shifting ice from destroying drilling rigs in winter.
Onshore, an oil processing facility the size of Washington DC is a swarm of construction activity. In stifling summer heat, that is where Leonid and hundreds of others work.
Once at full capacity, Kashagan will produce 1.5 million barrels of oil per day — enough to power Italy.
Three onshore tanks will contain 2 percent of global daily crude consumption. Electricity will be carried to the field via 6,000km of cable — roughly the distance between London and Kabul.
“This is where the oil will flow from,” said one Kashagan official, who, like most, spoke on condition of anonymity. Where it flows to is “for the politicians to decide.”
Further up the Caspian shore near Kashagan, people in the village of Dossor see no need for anonymity in discussing their experience of oil wealth.
“We have been producing oil for 100 years here,” said Bakhyt Smatullin, an official in charge of local oil production in Dossor, which is home to Kazakhstan’s oldest deposit.
“This village should be made of gold by now,” Smatullin said.
Oil was discovered by Swedish investors 100 years ago, but the village is a ramshackle collection of huts around a few creaking oil rigs. Herds of camels graze nearby.
Up to a quarter of the Kazakh population still lives in poverty despite the oil and metals wealth.
Kashagan became a source of particular tension in 2007 when the Kazakh government accused its operators of allowing costs to spiral and missing the original 2005 production start target.
The row unnerved investors and sparked concerns that the government could embark on a course of resource nationalism, potentially denying the multinationals access.
Adding to its complexity, Kashagan lies at the heart of a delicate ecosystem, home to many species unique only to these waters, such as the rare Caspian seal.
Local campaigners say thousands of dead baby seals have washed ashore since 2000, suggesting the deaths may be linked to oil drilling — a charge denied by Kashagan operators who say they are strongly committed to protecting the environment.
Sulphur is another point of contention. Yellow piles the size of several soccer fields produced elsewhere in Kazakhstan are a common concern.
Ecologists say biodiversity eroded when the Caspian Sea became the subject of mass industrial exploration in Soviet times.
“After the Soviet Union collapsed, all industrial activity stopped and nature became clean,” said Fyodor Sarayev, a local photographer who is documenting disappearing wildlife. “But now the steppe is empty again. The steppe is full of grass but there are no animals to eat it.”
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College