In June 2000, a Western consortium led by the Italian company Eni discovered a huge oil and gas field in the North Caspian Sea region of Kazakhstan, which was named "Kashagan Field" because it was located in the Atyrau region on the 150th anniversary of the poet Kashagan's birth.
The largest oil field discovered in more than 30 years since the 1968 Prudhoe Bay offshore oil field in Alaska is estimated to have geological reserves of 35 billion barrels and production of 1.5 million barrels per day at its peak.
As we all know, oil is the blood of modern industry, and its importance is self-evident, if you can get a piece of the pie from this oil field, you will definitely make a lot of money, this can be seen by looking at the luxurious life of the royal family and aristocracy in the Middle East.
After the collapse of the Soviet Union, Kazakhstan and other countries became independent, and the large oil fields in the North Caspian Sea, which were originally planned to be exploited, were shelved. However, the willingness of China to spend $5 billion to take over the oil field, which the Americans see as an "abandoned baby," has baffled the Americans.
So, what is the reason why the Americans choose to abandon this "cash cow", while China is willing to take over?
After independence, Kazakhstan's finances became increasingly strained, and it was eager to improve the situation by developing offshore oil and gas resources. However, due to the lack of funds and the lack of necessary equipment and talents, we can only look regrettably at the North Caspian Sea, which is rich in oil and gas resources.
In order to change this dilemma, Kazakhstan decided to cooperate with other countries to jointly develop the oil and gas resources of the North Caspian Sea. In November 1997, Kazakhstan** signed a sharing agreement with an international consortium of internationally renowned oil companies, led by the Italian Eni Group, to carry out drilling and exploration work in 5,600 square kilometers of the North Caspian Sea.
In addition, Kazakhstan** has agreements with British Gas, BP, Statoil, Mobil Oil, Shell and Andorra.
In order to facilitate the exploration work, these seven foreign companies, together with Kazakhstan's own oil companies, established the "International Operating Company of Kazakhstan Offshore". It is worth mentioning that after the merger of BP and Statoil, this company has a total of 7**eastern, each of which owns 1428% of the shares.
Despite the many challenges faced by Kazakhstan**, through cooperation with other countries, they are actively looking for solutions to take their place in the future development of oil and gas resources.
After Kazakhstan gave its stake in the Kashagan oil field to Japan's International Petroleum Development Corporation and ConocoPhillips of the United States, it was eventually developed by the North Caspian Sea Operations Company.
However, despite the completion of the field's exploration, it was not officially commercially exploited for the next 13 years. ConocoPhillips even sold its stake outright.
The reasons behind this situation are complex, and there are many difficulties encountered in the mining process.
Extreme weather in the northern part of the Caspian Sea, with a maximum of 40 in summer and a minimum of minus 40 in winter, local outdoor work should be heated regularly, otherwise it will be frostbitten. In addition, from November to March, the northern part of the Caspian Sea has a five-month ice period, which requires specialized special operation vessels.
When developing oil and gas fields, North Caspian Operations Company has very high requirements for equipment, materials and processes. In order to develop the oil and gas of the Kashagan oil and gas field as soon as possible, the North Caspian Sea Operation Company has made a lot of preparations.
The climate and geography of the northern part of the Caspian Sea are complex, and it is not possible to build drilling platforms using traditional concrete structures, but only to use a "stupid method" - the construction of artificial island drilling.
To build the artificial islands, millions of tonnes of limestone need to be filled with the seabed, which needs to be transported by ship from 265 kilometers away. If the stone is available, it also needs to be reinforced with special steel that can withstand low temperatures.
The Kashagan oil field has poor geographical conditions and requires high-end equipment and materials, but Kazakhstan has limited industrial capacity and cannot be self-sufficient, so it can only rely on foreign procurement. **Introduced a policy requiring the use of home-grown equipment and the hiring of local workers, otherwise fines.
To achieve this goal, the North Caspian operation company procures equipment from Kazakhstan and promises to have 80 local workers at its peak. However, Kazakhstan has a backward industrial level, such as cement plants that are unable to produce cement for G-grade oil wells.
Some of the equipment purchased does not meet the requirements and cannot be returned, and can only be shipped to Italy for secondary processing. Policy interference has become the biggest problem in the development of oil fields.
The Caspian Sea is rich in life, with rare fish such as sturgeon and bream, as well as endemic species such as the Caspian ringed seal. However, oil extraction and overfishing have led to a drastic decline in the Caspian Sea life, sparking anger among the people of Kazakhstan.
* Immediately introduce strict environmental protection policies and impose penalties on the Kashagan project. The project was shut down due to environmental pollution and was fined $5 million. An agreement signed in 1997 stipulated that the Kashagan field would be commercially developed in 2005, but for various reasons it could not materialize.
The international consortium thus pays 1$500 million in compensation to postpone commercial development until 2007-2008. However, in 2007, commercial development was still not possible, and the two sides negotiated again, and finally Kazakhstan** increased the profit share.
The international consortium had fantasized that investing $10 billion in the project would reap unimaginable benefits. But after 10 years and an investment of $30 billion, the oil field still did not produce oil.
The agreement signed in 1997 is due to expire in 2041, and Kazakhstan** has not agreed to extend it. Even if oil production is successful in the short term, nearly a fifth of the proceeds will be distributed to the Kazakh National Oil Company.
After deducting the input costs of these 10 years, it is obviously impossible to make a lot of money. As a result, most of the Western consortia have opted to withdraw, with only Eni, ExxonMobil, International Petroleum Development Co., Total, and Shell holding out.
But unexpectedly, in 2013, PetroChina decided to enter the market. This is the embodiment of China's far-reaching strategic vision.
As a large industrial country, China's demand for oil has always been strong. Since 1997, China and Kazakhstan have opened the door to energy cooperation, and PetroChina has successfully defeated large Russian and American oil companies to obtain part of the shares of the two major oil fields of Aktobinsk and Uzin.
The agreement also stipulates the construction of an oil pipeline connecting China and Kazakhstan, and the completion of this project has made it possible to transport a large amount of oil directly from Kazakhstan to China's Xinjiang, saving a lot of transportation costs.
The Kashagan field is a major concern for our country, and we have been working hard to be able to join it. In the spring of 2003, British Gas announced its withdrawal from the Kashagan project, and CNOOC and Sinopec immediately signed an agreement with the company to buy 166 of the equity.
However, companies in other Western countries are reluctant to let us share in this benefit. Eni Group exercises its pre-emptive options to share with other shareholders an interest in British Gas.
Since then, we have been waiting for an opportunity, and that wait is 10 years.
ConocoPhillips announced in October 2012 that it would take 84% stake. The buyer is Indian Oil & Gas Corporation's Vidhi***, who plans to buy the shares for $5 billion**.
Indians are confident in this acquisition, which is also due to their national nature, always full of self-confidence. However, the seemingly smooth deal was ruined by the Kazakh Ministry of Oil and Gas.
In July 2013, the Ministry of Oil and Gas of Kazakhstan announced that it would exercise its pre-emptive options to purchase ConocoPhillips 84% stake. Currently, Eni, ExxonMobil, Shell, Total and Kazakh National Oil Company each hold 1681% of the shares, 756%。
Who Kazakhstan** will transfer its stake in ConocoPhillips to has become the focus of attention.
Chinese leaders visited Kazakhstan on September 6, 2013, and at a press conference the following day, they officially announced that PetroChina had successfully purchased a stake in the Kashagan oil field project on the Caspian continental shelf.
The signing of this agreement marks that China's oil extraction business in Kazakhstan has accounted for 25% of the total, and it is even on a par with the United States. However, China does not have a stake in any of the three largest oil and gas projects that are about to come on stream in Kazakhstan, putting China's market share at risk of continuing to decline.
Therefore, the successful acquisition of the Kashagan field stake is undoubtedly something to celebrate. However, this also means that India loses out on the acquisition.
Originally, India was considered the top candidate for this project, but it failed to acquire international oil fields, such as Petro-Canada and Uganda, which caused India to fail again in this acquisition.
As a result, India is very upset about this and hopes to increase its influence in Central Asia.
The Americans were surprised when the Chinese bought a stake in the Kashagan field, but not as depressed as the Indians. They thought that oil field was a piece of chicken ribs, neither tasty nor worth discarding.
They laughed at China's takeover. What they didn't expect, however, was that many technical problems had been solved since China took a stake. China has used its strong infrastructure capabilities to help Kazakhstan build a dam in Kashagan and open up sea transport routes.
At the same time, China has also made outstanding contributions to environmental protection and the recruitment of local personnel. In September 2016, the Kashagan field was officially developed, producing 750,000 tons of oil that year, and since then it has grown year by year, reaching more than 15 million barrels per year.
China has made huge profits from this, and a large amount of oil has been continuously sent to China through the China-Kazakhstan oil pipeline, providing a steady stream of power for China's industrial production.
Despite the huge costs, at the last minute of the fruit picking, they chose to sell their shares. However, when China took over the oil field, it succeeded in turning waste into wealth in a short period of time, turning that oil field into a cash cow.
I wonder what those Americans who laughed at China now think?