The death of mega oil projects
When discovered in 2000 the Kashagan oilfield, offshore Kazakhstan, was hailed as the biggest oil find since the discovery of Alaska's Prudhoe Bay in the 1960's. The world's largest oil firms – ExxonMobil, Shell, Total, Eni, BP, Statoil and Inpex among them – all rushed to take stakes in the project, promising Kashagan would start gushing oil in 2005 and be a lasting totem to the skill and engineering prowess of the industry.
Kashagan started pumping oil last Wednesday, an epitome of cost overruns, complexity and waste. A decade late and ultimately US$50bn to develop, it is already gaining infamy. The Wall Street Journal called it a 'hole in the Caspian Sea'; other wags have taken to naming it 'Cash-gone'. One of the world's most significant engineering projects is being mocked rather than marvelled.
Although it is thought to hold 35bn barrels of oil and will contribute 1.5m barrels of oil per day in production – about the equivalent of Libyan production – Kashagan's  return on capital is likely to be small, perhaps 10% at the current oil price.
Even this would be miraculous. The reservoir is four km below the seabed, where oil comes infused with toxic sulphur gas requiring removal. Because the Caspian Sea freezes for part of the year, the consortium has had to build several islands to house drilling equipment, build custom pipelines and make concessions to a sometimes hostile Kazakh government.
The delays, the difficulties and the immense cost of Kashagan have had a lasting impact on the industry, with many swearing it is simply too much capital to risk on such a complex project and that shale formations offer a better use of capital. The birth of Kashagan may well herald the death of the mega oil project.