To boldly go

The prospects for oil and gas in the Caspian basin were undoubtedly exaggerated, but the region continues to attract Asian investors and small to medium-sized energy companies, writes NJ Watson

LUKOIL'S admission in August that another of its Caspian projects had failed to find oil or gas was a salutary reminder of the hype that once surrounded the region's resources. Lukoil and its partner, Kazakhstan's state-owned KazMunaiGaz, abandoned exploration in the Tyub-Karagan Block, in the Caspian Sea, after drilling to the planned depth of 2,500 metres without success. The decision to explore the block has proved a costly failure: the Russian company had agreed to meet all the exploration-phase expenses as part of a 40-year production-sharing agreement (PSA) it signed with KazMunaiGaz in early 2004. Lukoil had high hopes for Tyub-Karagan – it estimated reserves of 2.4bn barrels and pred