First Oil Nears For Kazakhstan's Supergiant Field

October 21, 2012

The manmade islands that are home to Kazakhstan's mammoth Kashagan oilfield project rise like a mirage to the boats churning through the shallow waters of the Caspian Sea.

Creating them has been a gargantuan feat but the real test is yet to come, as uncertainty persists on when the first oil will actually be drawn, although that's expected sometime next year.

When surveyors confirmed in 2000 that Kazakhstan had a new supergiant oil reserve, the world's energy companies reacted with glee. It was the type of find that had no longer seemed possible. Nothing that big had been seen in four decades.

Kazakhstan's President Nursultan Nazarbayev branded the Kashagan field, which some believe holds up to 13 billion barrels of recoverable oil, as the great hope for the future of his fledgling Central Asian nation.

Yet developing a remote offshore site half the size of Delaware that is blighted by weather ranging from blazing to glacial has proven difficult. The northern section of the landlocked Caspian Sea is extremely shallow compared to most offshore energy projects. That makes transporting heavy equipment a problem, as deep-hulled vessels can't be used. The area's fragile ecosystem is also the site of spawning grounds for endangered sturgeon, birthing habitat for the rare Caspian seal and migratory sites for numerous birds.

Delays in the Kashagan project have also strained relations between the oil companies developing it — from Italy, France, Holland, the United States and Japan — and the government of Kazakhstan.

Kazakhstan, a mainly Muslim nation four times the size of Texas that borders Russia and China, gained independence after the 1991 collapse of the Soviet Union. It's a thinly populated steppe nation of 16.5 million people that has grown wealthy off of several major oil projects and other substantial mineral reserves. Many locals, however, complain that the country's riches are poorly distributed.