What If Kurmangazy Comes Up Dry? Possible Implications for the North Caspian Offshore
More than any other prospect, Kurmangazy has been the very symbol of the complex and shifting oil politics of the north Caspian offshore. But the disappointing results from the first well cast the prospect in a new light.
* If Kurmangazy turns out not to be prospective, the position of Rosneft as a national flag-bearer in the north Caspian would be substantially weakened, together with the Kremlin's vision of state-to-state collaboration to develop the Caspian in common through state-owned champions. However, with the absorption of Yukos and Sibneft by Rosneft and Gazprom, respectively, both state champions are busy developing their new onshore properties in Russia, as well as opening the way into East Siberia and the Russian Far East. The north Caspian looms less large in their priorities as a result.
* Kurmangazy would have been Rosneft's major play in the north Caspian, and disappointment there will leave LUKOIL as the premier Russian oil company in the north Caspian. Even if LUKOIL's license areas turn out to be largely gas prone, the company will still monetize the gas through its strategic agreement with Gazprom, which includes marketing LUKOIL's gas into the Russian domestic market.
* If Kurmangazy were to disappear from Kazakhstan's portfolio, the country's basic hydrocarbons position would be largely unaffected, since its collection of assets in the Caspian offshore is turning out to be immense. However, negative results in the north Caspian could cool investor interest, an outcome Kazakhstan would prefer to avoid.
