The Kashagan oil field has attracted widespread local environmental objections because it is right at the mouth of the Ural river, the last natural breeding ground of the famed, but endangered Beluga sturgeon, which produce the world’s most expensive caviar. Local fishermen and green groups believe exploitation of the field will cause the demise of the sturgeon.
Professor Muftach Diarov, director of the Atyrau Institute of Oil and Gas, an independent geological school, believes that exploiting the field in a known seismic zone could trigger a massive earthquake.
He said that the oil was under enormous pressure at temperatures of 100°C to 120°C. “This is a volatile area in geological terms. We had an earthquake here in 2000. We just don’t have enough experience working under such extreme conditions and [we don’t] know what would happen should this oil be released and a void created under such pressure. Releasing oil at 1,000 times atmosphere pressure is like releasing a genie in a bottle. Who knows what will happen? If there is another earthquake, the new pressures created in the oilfield could trigger a man-made earthquake. Oil would spill out into the sea and cause an environmental catastrophe.”
The northern Caspian is very shallow - only three metres deep - and freezes in winter. The consortium has had shallow-draught icebreakers built to keep the area open during the five months of freeze. The waters are also too shallow for traditional oil rigs so the operator, Agip of Italy, which also has a 16.67% share, is building artificial islands from which to operate the wells.
Professor Diarov is also concerned that the five nations that border the Caspian - Russia, Iran, Kazakhstan, Turkmenistan and Azerbaijan - have no joint agreements about the safety of the sea or conservation. “It is only oil dollars that talk round here,” he said.
Local environmental groups have sent a petition to the UN asking it to intervene in getting the five nations of the Caspian round a table.
Their petition talks about “deep disquietude” over the fate of the sea and the potential for man destroying its unique wildlife - including the four commercially important species of sturgeon.
They are also concerned about human health. The air pollution from existing refineries is one objection but the other is “sour gas” - natural gas mixed with oil which is heavily contaminated with hydrogen sulphide. The nearby onshore field, which has been producing high quality crude, has a similar sour gas problem. This field, 50% owned by ChevronTexaco and 25% by ExxonMobil, is run by Tengizchevroil, known locally as TCO, and claims to contribute $1.8bn a year to the Kazakhstan economy.
Byproduct blighting Caspian life
There is a sulphur mountain on the shores of the Caspian Sea, more than 6 million tonnes of it, and it is growing by 4,000 tonnes a week. The sulphur is a byproduct of the Tengiz field, stockpiled when the “sour gas” brought up with highgrade crude is cleaned up to produce liquid petroleum gas, or LPG, for European Union markets. The mountain has become a huge embarrassment to field owners Chevron and ExxonMobil. Not only is it the focus of local protests, but yesterday field operator Tengizchevoil, or TCO, was fined 11bn tenge (US $80m) by a court in Kazakhstan for “ecological damage”. TCO said it was “very disappointed” and considering an appeal to the supreme court.
“According to our data, this sulphur negatively affects the environment,” said Turaly Onerbayev, regional representative of the natural resources and environmental protection ministry. Even before the imposition of the fine, it was clear that about 3,000 people were having to be moved 50 miles away because of pollution - and they blame sulphur dust for their illnesses.
TCO denies the charge and says the sulphur is safe, but has decided to get rid of it. Until recently it had virtually no outlet for it; in landlocked Kazakhstan the only route out for large volumes of sulphur has been by rail, but TCO has used every available slot for transporting oil. Now, however, TCO has linked up with the Russian oil pipelines, so most of its output no longer needs to go by rail. But there is a second problem: a worldwide sulphur glut. Some 40m tonnes of sulphur a year is used by industry, mostly in the form of sulphuric acid, but there is still an excess. From a peak of $180 a tonne in 1988, sulphur prices have dropped to $36 a tonne this year. To unload an additional 6 million tonnes on the market would mean the price would drop to near zero.
But TCO has to do something. It has put in a $54m plant to process the sulphur into flakes for the Chinese fertiliser market and granules for the western market. The flakes are already being exported by rail to China and the granules will be heading west to Black Sea ports for European and American markets. At most TCO expects to be selling 3,000 tonnes a week next year, but even that vast quantity means the sulphur mountain will still be growing at 1,000 tonnes a week.
Joel Adamson, whose task it is to address the issue, said: “We have to take a softly-softly approach. As it is, each tonne we sell makes a loss, simply because of the distances we have to transport it. To depress prices further makes no sense, so we are producing a high quality product at a very low price to try to corner the market. We hope prices will go back up, but in the meantime we hope to get an increasing market share so at least we can begin to reduce the size of the mountain.”
Given the problem facing the existing field, a much larger offshore field nextdoor operated by Agip will not try to sell its sulphur - but neither will it create another mountain. Instead it plans to store millions of tonnes in underground chambers, thereby postponing the problem indefinitely.