AZERBAIJAN - The Reserves.

The proven recoverable oil reserves of Azerbaijan have long been the subject of debate between foreign quarters and the state oil firm Socar. Even within Socar, some experts do not agree with others on the actual size of recoverable reserves. The official estimate of proven oil reserves is 4.2 bn barrels, consisting of about 3 bn barrels onshore and 1.2 bn barrels offshore. But these exclude the offshore areas awarded to foreign companies under PSAs signed since 1994, which are targeting more than 25 bn barrels to be found, proven and developed.

Opening an oil and gas conference in Baku in June 2000, President Aliyev said: "Our (Socar) experts also think Azerbaijan's total gas reserves could be some 4 TCM". Experts said he was referring to the offshore Absheron area operated by ChevronTexaco, which could not find the estimated 3 TCM (105 TCF) reserve there, and the offshore Shah Deniz area operated by BP (see below).

Hopes that foreign firms would find big oil reserves on the Azeri side of the Caspian were boosted in late June 2002 as Agip, on completion of year-long appraisal drilling into the Kashagan reservoir in the Kazakh zone of the Northern Caspian Sea, estimated the field's "producible" oil reserves at 7-9 bn barrels. Later Kazakh Energy Minister Vladimir Shkolnik told a London conference Kashagan's reserves could reach 20 bn barrels. In May 2000, LUKoil announced the discovery of 2.2 bn barrels of recoverable oil at the Severny block off the Russian state of Astrakhan, until then believed to be the least promising part of the Caspian.