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aku is a very bureaucratic city. In other regions of the world, an offshore surveyor normally spends the majority of the time performing surveys to ensure a rig’s

In Baku, we do that, yes. But we also find that a large part of our time is spent working with local government officials whose offshore statutes have yet to be rewritten or formalized for compatibility with internationally accepted standards and practices.

Following the Soviet era and the increased activities of foreign oil companies in the region, the existing Soviet standards and their procedures could not readily be adapted to the international practices followed by other economies. Neither could the Soviet technical norms be readily applied to Western-manufactured offshore equipment. This has lead to questions related to the exchangeability of equipment with existing Soviet equipment.

Tough Environment for Projects
Foreign clients in the region are looking to understand what they need to do to make their projects acceptable to local authorities. At the same time, the local authorities are trying to develop their system to accommodate the new technology coming into their country and to calibrate standards to the practices of foreign operators. In Baku, a project often requires approval from a several entities, from the State Safety committee, called GosGorTechnadZor, right on down to customs and the municipal fire department. There are no applicable offshore regulations here that are compatible with the practices that foreign oil companies are accustomed to. Maritime regulation is still being developed, and governments in this region – Azerbaijan and Kazakhstan, in particular – are still trying to find the right way to govern their offshore wealth.

But regulations are only half the battle. There is also the physical environment, which is tough on projects. In most cases, the infrastructure is nonexistent or failing. Many of the fabrication yards that exist do not meet the safety standards required by oil and gas clients from their contractors. Three months of every year, the northern part of Caspian ices over, complicating the transport of oil to shore. The north part of the Caspian is home to the sturgeon, essential to the region’s caviar industry, and probably facing the very strictest environmental regulation, when regulation is finally enacted. And, finally, transporting oil from this landlocked sea and to the West continues to be a hurdle. Pipeline is being laid along several different routes but there remains concern. The areas through which the pipeline travels are often engaged in disputes and strife.

Trident 20
Despite this, projects continue to come here, and they do succeed. In our office, we have been busy with new construction surveys for the Trident 20, a self-elevating drilling unit for Transocean Sedco Forex. Built by the Caspian Shipyard Company, a Joint Venture between Keppel-FELS and the Azeri State Oil Company, SOCAR, this project began in May 1998 at the ruins of a fabrication shop, which had no lights, no power, no commissioned lifting system, barely sufficient jigging infrastructure to fabricate rig sections, and a severe shortage of materials and equipment. The goal was to build this world-class advanced rig concurrently with the basic infrastructure of the fabrication yard. In the middle of this, it was ABS’ job to ensure compliance with the international norms for the unit.

When the completed unit was eventually audited by a third party on behalf of an oil company in June 2000, it was recognized for its success and quality. Our ABS contribution was specifically noted. The Azeris now refer to the Trident 20 as a national pride. In the inauguration ceremony, the Azeri president hailed the success in a hour long speech. Importantly, the unit was delivered in advance of its contractual delivery date and with no cost overruns.

Challenges & The Future of the Caspian
So, there are challenges, always challenges, but they can be overcome. The Trident 20 is a perfect example and a true achievement for the builders and the owner. It is also good for others to see this – that projects for the Caspian can be done to a high level of excellence, despite the difficulties that lie on the surface.

For the future, I see the Caspian gaining its momentum after the slow down of the recent period. The hydrocarbon pattern of the Caspian has not yet been fully confirmed -- oil, gas or condensate -- but the estimated reserve is huge. That is why most of the oil majors and an increasing number of international supporting industries are anchoring in the region.

The recent oil discovery on the Kashagan field in the Kazakh sector is massive and field development will most likely be extensive. The world class gas field discovery in Shah Deniz in the Azeri sector is impacting the potential of gas supply in the region. Field development is now commencing.

The need for internationally accepted regulations is readily recognized and in that, ABS has been actively involved, liaising with governments here to help shape the regulation to what we see as reasonable and customary based on our experience in other areas of the world. There is no point in trying to take North Sea regulation and apply it here. The Caspian has its own unique physical challenges, and regulation must be developed with that in mind. However, many believe that the Gulf of Mexico model is as close to the Caspian need as any other model.

I expect to see the Caspian become less a region to "anchor in," as it is now, and more a real activity base for oil companies. Right now, the attitude of the oil and gas community seems to be transitioning. People I talk to are moving away from their old wait-and-watch stance. They say they are expecting more active participation in terms of new field development and new drilling units.

The Caspian’s future rests on still evolving regulation, on solving transportation issues and on economics. Baku is a town that can go silent very fast, as happened in 1999 when oil prices, oil supply and regional unrest turned this place into a ghost town. That is not the Baku I know today, fortunately. There is activity and a significant amount of optimism and, as in the example of Transocean Sedco Forex, there are also successes to be found.

Nothing is unusual of what is happening here. History is repeating itself. If you wish to verify this, read The Prize.

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