Here's an interesting article from today's NT Times....
Texaco in Rich but Troubled Kazak Field
By STEVE LEVINE
ALMATY, Kazakstan -- Texaco Inc. has reason to crow about its latest deal. In one stroke, its reserve base swelled nearly 20 percent and it became a major participant in one of the world's most coveted energy-producing regions.
But that has not prevented some gentle ribbing.
One gag asks the name of the most grateful party in the deal, in which Texaco recently bought 20 percent of Kazakstan's second-richest hydrocarbon property.
The answer: British Gas PLC and AGIP SpA of Italy, the companies that sold off part of their stake to Texaco. For Kazak oil development has been enveloped in problems. "It seemed like a headache to BG and AGIP," said a Western oilman in Moscow who spoke on condition of anonymity. "I should think they should be pleased to get rid of 20 percent."
Texaco's acquisition is a share in Karachaganak, a vast oil and natural gas field in the steppes near the Russian border, and the most troubled major energy project in the Caspian Sea region.
The field could add an impressive 700 million barrels of oil to Texaco's reserve base of 3.7 billion barrels. Texaco's president of worldwide exploration, C. Robert Black, calls it the "hub" of a plan to play a leading role in the Caspian region.
"We are a latecomer," Black said, "but I very much believe we will become a big contributor" to the region.
Yet five years after the European investors began negotiating for Karachaganak, the project has been all but crippled by a Russian blockade. Today, its developers do not even speak of reaping the market rewards of the field's greatest attraction -- 18 trillion cubic feet of natural gas, equivalent to 3.3 billion barrels of oil and 62 percent of Karachaganak's value. Rather, they focus on the third of the field's riches that remain in 2 billion barrels of a prized light crude called condensate.
"A couple of years ago, it looked like a bright deal," Julia Nanay, an analyst with the Washington-based Petroleum Finance Co., said of the Europeans' longstanding effort to sell part of Karachaganak. "Now, it's a lot trickier question."
Karachaganak's difficulties underscore the continued perils facing foreign energy companies working in the Caspian region. The State Department estimates that the region -- Kazakstan, Azerbaijan, and Turkmenistan -- possesses 178 billion barrels of proven and possible oil reserves. If the estimate proves to be correct, the region would be on a par with the richest Persian Gulf states.
With the stakes so high, the Clinton administration has tried to soften Russian efforts to block energy exports from the region. The Texaco deal coincides with a weakening of the Russian blockade. Today, analysts say, Russia appears to be convinced that to remain a player in Caspian oil, it no longer can rely on its debilitated military, but must compete commercially.
A demonstration of this came on Sept. 17, when Deputy Prime Minister Boris Nemtsov of Russia said Moscow planned a bond issue to build a $220-million, 176-mile-long pipeline bypassing unstable Chechnya. The pipeline, he said, was intended to insure that Moscow could fulfill a guarantee to a consortium led by British Petroleum to ship oil from Azerbaijan to a Black Sea port.
The prospect for an even further unlocking of Caspian energy exports has come with the recent appearance of two surprising potential new channels -- China and Iran. Worried about future oil supplies to its western province of Xinjiang, China has recently bid for and won two large Kazakstan oil deals. It triumphed by agreeing to build a $3.5-billion, 2,000-mile oil pipeline from Kazakstan to Xinjiang, oilmen say. Iran burst into the regional equation when the United States unexpectedly lifted its opposition to a Turkmenistan natural gas export pipeline traversing Iran. This development attracted considerable attention in this region because many Western oilmen regard Iran as the most commercially feasible export route.
The trouble for Karachaganak is that while Moscow has relaxed its attitude toward Caspian oil exports, it has kept a chokehold on the sale of natural gas abroad. Rem Vakhirov, the chairman of Russia's natural gas monopoly, Gazprom, said he was protecting the export market for his country's own considerable reserves. Vakhirov has been quoted as saying that no Kazakstan natural gas would be permitted in Gazprom's export pipelines.
There is a positive side. Both British Gas and AGIP have partnership rights in an export pipeline that when completed in 2000 will transport oil to Russia's Black Sea coast. Karachaganak's quota will be 120,000 barrels a day, about half the expected initial production.
Texaco's venture into Central Asia follows an effort to develop a 2.2-billion-barrel oil field in the far north of Russia called Timan Pechora. Russia has recently turned against foreign investment in its oil sector, and Texaco announced the Karachaganak stake with some fanfare.
The company did not disclose what it paid for its Karachaganak stake. Texaco did say it would cover $1.2 billion of the estimated $6-billion development cost of the field, in which British Gas and AGIP retain a 65 percent share. Black of Texaco said he expected other export routes to open for the condensate and, ultimately, that Gazprom would loosen its grip on natural gas. Meanwhile, the Karachaganak partners will try to sell their natural gas locally.
"We recognize the importance of the Caspian area," Black said. "Now you have all the major oil companies out here, and the U.S. government. I believe you will have export routes out."
Copyright 1997 The New York Times |
