bout 3.5 million years ago, the northern Caspian region was covered with water. A sudden planetary warming dried the inland lake and left a 1.2-mile layer of salt. When the Urals began to emerge, erosion forced sediments down the Volga River. It piled a 2.5-mile-thick layer on top of the Caspian. Today, massive oil plates at fields like Tengiz are trapped at depths of up to 7.5 miles.

“The bigger plates are hard to reach and we are talking about $20 million worth of investments per layer,” says Al Sehsuvaroglu, the CEO of Big Sky Corporation. Although more than $7 billion worth of FDI flowed into Kazakhstan’s energy sector in 2004, the industry has faced logistical drawbacks. Offshore infrastructure is scarce, and the country has relied on foreign technology and know-how. Also, because Gazprom owns the pipelines, natural gas has not developed organically.

Still, the country sits on more than 160 billion barrels of proven oil reserves. Some think the size of reserves could be as large as in Saudi Arabia. While deposits shrink everywhere else, Tengiz and Kashagan will continue to grow for another 15 years. Kazakhstan will celebrate 107 years in the oil industry in 2006. For Uzakbay Karabalin, the President of state-owned KazMunayGaz, the learning curve has been steep.

“It’s been difficult because we had no experience in the market economy. We had to learn about economics, finance and banking,” says Mr. Karabalin. Until 2000, another unknown was how much oil was hiding in the Caspian. Seismic studies have since revealed that Kashagan is the largest deposit found in the last 30 years. “For us, offshore operations are a new area of activity and therefore a bit of a challenge. That’s why we will be working again with the largest oil companies, including American ones,” says Mr. Karabalin.