The Myth of Caspian oil.

• Author: Eytchison, Patrick
• Position: Thinking Economically

Since 9/11/01, hundreds of articles have appeared referring to "the Caspian Sea's vast oil reserves." Yet these "vast reserves" are nothing more than a myth created by the US Geological Service (USGS) and the Energy Information Agency (EIA). Until the end of World War II, the Caspian was the Soviet Union's main oil producing region. Later, Soviet production moved to the Vulga and then to Western Siberia Oil production in the Caspian had become too difficult and too expensive.

After the OPEC oil shock of the 1970s, the US began a search for alternate petroleum sources around the world; a re-exploration of the Caspian was a part of this search. Even before the breakup of the Soviet Union a team led by the USGS' Dr. Harry E. Cook was in Kazakhstan and Kyrgyzstan. As a result, it was determined that substantial untapped oil reserves might exist in Kazakhstan. Atter the fall of the Soviet Union, several consortiums of Western oil corporations (Exxon Mobil, Phillips, Royal Dutch Shell, and others) entered the Caspian in order to expand exploratory drilling. By 2000, it was announced that significant reserves might exist, although this was not vet confirmed. Eventually the discovery of two "giant" fields in Kazakhstan was made public: Tenzig, in the south, and Kashagan, in the north. Speculation ran wild.

Actually, the existence of probable reserves as high as 200 billion barrels (bbl) had been announced by the USGS in the late 1990s, before exploratory drilling had taken place. This prediction, if true, would have made the Caspian one of the world's most significant oil production regions, equal to or more important than Iraq. On the other hand, important think tanks, as well as the Wall Street Journal and Time Magazine sharply disagreed with the USGS estimates. The USGS' figures were based on a...