OKIOC: $600 mln spent on Kazakh Caspian shelf exploration

/REUTERS, Jan.20, 00/ - Roughly $600 million has been invested since 1993 in drilling a first exploration well on Kazakhstan's Caspian shelf. Offshore Kazakhstan International Operating Company (OKIOC), the consortium carrying out the drilling, spent about $300 million on seismic work and $300 million in 1998 and 1999. At a news conference in Almaty, OKIOC business manager Kenzhebek Ibrashev said drilling of the first two sections of the East Kashagan-1 well had been completed. Preparations are currently under way for drilling the third section. "The well has been drilled to over half of its planned depth (of 4,500 meters)," Kenzhebek Ibrashev said. He said the consortium "does not have a policy for stopping drilling operations" in the winter months. "There are certain limitations on operations in heavy ice conditions," he added. Earlier OKIOC announced it might halt drilling during the winter in the event it drilled into a productive horizon. It would resume drilling in spring. OKIOC will evaluate the results of the drilling in the spring next year, Ibrashev said. Regardless of the results, it will proceed with drilling other wells. Oleg Starukhin, a consultant to the consortium for environmental issues, said OKIOC was "strictly adhering to its principle of zero-discharge:No industrial waste associated with the drilling will be discharged into the Caspian". The consortium also has a program for environmental monitoring of the sea. As earlier reported, OKIOC has insured the environmental risk of drilling for $500 million. OKIOC was formed in September 1998 to explore the Caspian shelf under a production-sharing agreement signed in Washington in November 1997. Italy's Agip, British Gas, Shell, a BP/Statoil alliance, Mobil, Total, and Kazakhstan's KazakhCaspiShelf founded the consortium, each with a one- seventh interest. KazakhCaspiShelf sold its stake to Inpex Nord Ltd. of Japan and Phillips Petroleum of the U.S. for $500 million in the fall of 1998. Drilling at the Kashagan site began in August this year. Kazakhstan's Caspian shelf is forecast to contain 12 billion tonnes of hydrocarbons.