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Analysis: C. Asia's last oil, gas frontier

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by John C.K. Daly
Washington (UPI) Oct 5, 2007
While Western attention in the search for hydrocarbons in the Commonwealth of Independent States has until now focused largely on the Caspian Sea, the race is heating up to exploit Central Asia's last significant body of water, the Aral Sea.

Unlike the Caspian, the subject of rancorous debate among Azerbaijan, Kazakhstan, Russia, Iran and Turkmenistan, the Aral's waters are divided solely between Kazakhstan and Uzbekistan.

Last month Uzbekistan's Aral Sea Operating Co. General Director Dilmurad Turdiyev said a seismic assessment of the Uzbek sector in the Aral Sea is about to begin, as the relevant equipment had been transported to Uzbekistan and sea- and land-based facilities established to both adjust the equipment and then begin the testing.

The action follows a September 2005 agreement that established an international investors' consortium for prospecting oil and gas in the Uzbek sector of the Aral Sea. While the consortium included Uzbekneftegaz, Malaysia's Petronas, Russia's Lukoil Overseas Holding Ltd., the Korea National Oil Co. and the China National Petroleum Corp., the exploration contract was reportedly awarded to PetroAlliance Services Co., headquartered in Moscow with an affiliate office in Houston.

PetroAlliance's exploration activities extend all the way from Azerbaijan to Russia's Barents Sea.

The initial $80 million first seismic exploration phase of the project is scheduled to last two to three years and is tentatively estimated at $80 million; depending on the test results, the $200 million second stage will involve the drilling of exploration wells, which, if successful, will be followed by third-stage development activity.

The test is undoubtedly sweet music in Tashkent, which has largely due to its geographical isolation lost out to the massive rush of Western investment into Central Asia. Uzbekistan is landlocked and its exports must cross two nations to reach the open ocean, and that geographical reality, combined with a tight governmental fiscal policy, has largely caused international investors to shy away.

But the eyes of the international community will be closely watching the seismologists' progress. While the Aral Sea might be geographically isolated, any exploration and exploitation of its resources will be scrutinized by environmental activists, as the body of water is perhaps the planet's most damaged freshwater resource, a brutal legacy of decades of Soviet centralized planning.

Beginning in the 1930s Moscow began to divert the waters of the Amu Darya and Syr Darya, Central Asia's most important rivers, arising in Tajikistan's and Kyrgyzstan's Pamir and Tien Shan mountain ranges, to irrigate downriver Uzbekistan's and Kazakhstan's vast cotton fields. Soviet inefficiency combined with Moscow's lack of local awareness produced by the 1980s a situation where nearly 90 percent of Central Asia's water was diverted to agriculture, primarily cotton production, with the Amu Darya and the Syr Darya rivers supplying nearly 75 percent of the region's irrigation. The Aral Sea deprived of sources began a disastrous shrinkage, an environmental catastrophe that has yet to be reversed. In 1967 the Aral Sea was the world's fourth-largest freshwater lake, but in the last 40 years it has shrunk by a startling 15,441 square miles, ruining the local community's health and livelihood. Moscow's response -- a project to divert a northern-flowing Siberian river to replenish the sea. Since achieving independence in 1991, Kazakhstan and Uzbekistan have attempted to cope with the problem, but a lack of funding combined with a need for the revenue generated by cotton cultivation have precluded the development of a comprehensive solution.

Uzbekistan has sought foreign aid to cope with the disastrous legacies of Soviet planning. Two years ago it signed an agreement with France to provide potable water to Qoraqalpogiston state, which borders the Aral's southern shore. Under the $11 million project, funds would be allocated to improve irrigation systems and provide people in the Aral Sea region with drinking water.

Uzbekistan is not alone in looking at the potential of the Aral Sea; in January 2006 Kazakhstan's KazMunaiGaz and Ukraine's Naftogaz Ukrayiny signed a memorandum of mutual understanding to analyze the potential of the Kulandy structure in Kazakhstan's Aral Sea sector toward a possibility of joint exploration work.

The West has belatedly begun to respond to the Aral's agony; in April 2006 the World Bank funded a project aimed at the restoration of the northern Aral by means of the Kok-Aral dam constructed in the Kazakh portion of the Aral Sea. Unfortunately, for the larger issues at stake, such well-intentioned efforts remain the proverbial drop in the bucket.

The restoration of the Aral Sea is far too large a project for either Kazakhstan or Uzbekistan to accomplish alone. If the environmentally friendly advertisements flooding Western television from the oil companies are to have any reality, then they could do much worse than to help Almaty and Tashkent restore the Aral Sea even as they develop Central Asia's last maritime frontier.

(e-mail: [email protected])

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China's CNPC invests in oil refinery in Chad
Beijing (AFP) Oct 6, 2007
China's largest oil producer, China National Petroleum Corp (CNPC), has agreed to invest in a joint venture oil refinery near the capital of Chad, state media reported Saturday.







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