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Minerals Report - International Seabed Authority

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One participant made the observation that during Dr. Vysotsky<br />

presentation of the offshore oil and gas resources of Russia, he had not<br />

presented any estimates of oil and gas in the Caspian Sea.<br />

This participant wanted to know if Dr. Vysotsky had any<br />

information on new discoveries in this geographic area. While<br />

acknowledging this oversight on his part, Dr. Vysotsky said that he knew<br />

the area very well and had maps concerning the potential of the area. Dr.<br />

Vysotsky said that a few months ago in the north part of the Caspian Sea,<br />

large oil fields were discovered in the area between Kazakhstan and<br />

Russian sectors.<br />

He said that the biggest Russian oil company discovered the fields.<br />

The recoverable reserves are 250 million tonnes. In the Kazakhstan<br />

section, Dr. Vysotsky noted that a consortium of companies is drilling<br />

wells. He described this area of Kazakhstan as containing very good<br />

prospects, whilst the Azerbaijan area contains fewer prospects. He said<br />

that the Iranian area showed good prospects for gas.<br />

Another participant noting that Dr. Vysotsky had said that the<br />

financial parameter is very important for deep-water oil exploration<br />

reminded the workshop that in December 1998, when the price of oil was<br />

about US$8.50, many small companies disappeared in mergers with bigger<br />

companies. This participant asked whether it is to be concluded that only<br />

big oil companies can undertake deep-water oil and gas exploration. This<br />

participant also wanted to know the basis upon which the big oil and gas<br />

companies could sustain this activity. Dr. Vysotsky said that exploration<br />

activity is dependent on the price of oil. He said that based on present<br />

knowledge it could be said that if the price of oil falls below $20 per barrel,<br />

exploration and development work in the deep sea would practically stop.<br />

He noted the wide range in operating costs in different producing areas,<br />

stating for example, that these varied from $1.50 per barrel in the Middle<br />

East, $4.00 per barrel in Libya, between $5.50 and $10.00 in west Siberia,<br />

and $12.50 per barrel in Canada. In this regard, he said that operating cost<br />

in the deep-sea area is about $5.60 per barrel.<br />

In response to a question by the Secretary-General on the<br />

likelihood of discovering oil in the international area, outside the<br />

continental shelf, Dr. Vysotsky said that considered thought would be<br />

required to respond to this. He suggested possible areas as including<br />

offshore Nigeria, in an offshore zone between Vietnam, China and the<br />

INTERNATIONAL SEABED AUTHORITY 515

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