Kashagan oil field development could harm health of Caspian Sea

May 24. Central Asia Online

By Kapiza Nurtazina and Yekaterina Brovkina

Kashagan oil field development could harm health of Caspian SeaIndependent analysts and environmentalists warn that development of the Kashagan oil field could end in catastrophe worse than that occurring in the Gulf of Mexico.

But oil companies and government officials say they have taken the necessary steps to prevent any problems, and are ready to respond to an accident should one occur.

At stake is 30-50 billion barrels of oil. Efforts to develop Kazakhstan’s largest offshore field have, so far, cost US $27 billion. Production is due to commence in late 2012, reaching 75m tonnes annually by 2019, which would make Kazakhstan one of the world’s top five oil producers.

But critics warn of oil spills that could kill the Caspian Sea.

Plans to drill 240 wells at Kashagan drive up the risk of pollution, said Makhambet Khakimov, director of the NGO Kaspiy Tabigaty.

Potential oil spills “may be far more hazardous than those in the Gulf of Mexico … where the wells are drilled at a depth of 1.5km. The Kashagan field lies only in 3-4m of water”, he said.

Offshore drilling is dangerous to the entire sea, warns Muftakh Diarov, a member of the National Academy of Sciences.

“We have seen the Caspian Sea polluted with oil products five times over the past few years”, he said. “When Kashagan starts to be developed, things may get far worse than that. The field is heavily over-pressurised, temperatures are high, and the (hydrogen sulphide) content is very high”.

Diarov recalled an oil blowout at Tenghiz in the 1990s accompanied by a fire “that took more than 300 days to extinguish”.

“It would be impossible to contain such spills, and the Caspian Sea might turn into a highly toxic puddle”, he said. “Other Caspian nations, including Turkmenistan and Iran, would lodge legal claims against Kazakhstan seeking huge compensation”.

Other observers are more sanguine.

CaspEco expert Serik Akhmetov doubts “the certainty of a Caspian catastrophe”. All projects must undergo an environmental impact assessment under Kazakhstani law, he said.

Kanatbek Safinov, executive secretary of the Oil and Gas Ministry, agreed.

“All corporate users of subsoil resources in Kazakhstan have pledged they will do everything to prevent oil spills as a source of potential direct damage to their own assets and have said they are fully aware of the high level of responsibility”, he said.

After BP’s oil well blowout in the Gulf of Mexico, he said, Prime Minister Karim Masimov required the oil and gas and ecology ministries to submit to government proposals for enhancing oil project safety.

In that connection, his ministry “set up a working group to pool efforts with other government agencies shortly in checking the safety of all offshore projects in the Caspian”, he said.

The North Caspian Operating Company (NCOC), the umbrella organisation for all Kashagan project participants), observes all environmental requirements, said Philippe Charlais, company spokesman.

The consortium has a special unit to contain oil spills, with equipment and personnel on standby at several Caspian ports to meet any emergency, he added.

Drilling techniques in the Caspian and the Gulf of Mexico differ, he said. “In contrast to deep-water drilling in the Gulf, the [offshore Caspian] drilling and extraction operations are similar to onshore conditions because they will proceed on artificial islands”.

The Ecology Ministry said it has a committee to oversee oil production safety and eight working departments nationwide.

The government decided May 18 to create a centre in Atyrau to deal with oil spills, an Oil and Gas Ministry press release said.

“Until we (build that centre), no oil production will be allowed under the law to commence at Kashagan”, Oil and Gas Minister Sayat Mynbayev said.

But sceptics say the Atyrau plans aren’t enough.

Khakimov suggested “suspending all Caspian oil fields currently being developed by Kazakhstan. They may be re-activated at a time when more reliable drilling and extraction methods have been developed”.

Diarov suggested drilling each well more carefully at the cost of reduced projected output.

“This would help to more effectively deal with oil spills … due to more-stringent control of production”, he said.

Galina Chernovaya, head of the NGO Globus, said Kazakhstani and international drilling laws need to be fixed. Production-sharing agreements impose all oil spill and fire costs on the Kazakhstani side and none on foreign corporations, she said.

The unresolved legal status of disputed Caspian Sea sectors “is a source of numerous questions”, she added. “Who will be held liable for an oil spill or a fire?”

“Talks with Iran and Turkmenistan have been especially difficult. In the event of an oil spill, one may expect our countries to start arguing instead of rushing to act immediately”, conceded a Kazakhstani Foreign Ministry delegate to the Caspian negotiations who requested anonymity.

CaspEco has proposed a number of draft laws.

“We have worked out and co-ordinated at the expert level two draft Protocols to the Framework Convention for the Protection of the Marine Environment of the Caspian Sea. … They are expected to be signed during the 3rd conference of the Tehran Convention signatories … in Astana next September”, Akhmetov said.

The Caspian Sea states have witnessed several oil spills. The largest — 20 sq. km in area — occurred on the Neftyaniye Kamni oil field in the Azerbaijani area December 20-23, 2008.