By ROBIN KNIGHT

yperbole has been part of the Caspian oil scene ever since Robert Nobel travelled to Baku in 1873 to buy locally grown walnut wood as material for rifle stocks. When he saw "spouters" uncontrollably gushing thousands of tons of oil, Robert forgot all about walnut. He summoned brother Ludwig and bought land and a primitive oil refinery. The resulting company, Petrole Nobel Freres, thrived for some 50 years but collapsed as the family fled from the invading Bolsheviks.

Adolf Hitler also had an eye for the main chance. At a crucial moment in World War II he split his forces and sent a key German army south toward the Caspian region to try to seize the oil fields. The offensive failed, in the process fatally weakening the Nazi assault on Stalingrad.

Today's dreamers are in the U.S. Department of Energy. In 1996 experts there decided that 178 billion bbl of oil reserves may exist in the Caspian basin--making the area second only to Saudi Arabia with 259 billion bbl. of reserves, twice the size of Kuwait's 94 billion and Iran's 93 billion.

But now a revisionist view is taking hold and some experts are saying that the estimates are exaggerated. The latest issue of the International Institute for Strategic Studies annual Strategic Survey, for instance, pours scorn on the Energy Department estimates. The figures, it argues, "imply that the Caspian area contains the equivalent of 400 minimum-size giant fields," defined as being at least 500,000 bbl of recoverable oil.

The IISS notes that only 370 "giant" fields have ever been discovered worldwide. "All this is based on little more than pure speculation," it says. "In short, Caspian energy is much less important than many political analyses have implied...Instead of the 16% of world reserves the [estimate] implies, the true figure is likely to be closer to 3%."

In all probability there is a balance to be struck between the extremes. As Mehdi Varzi, an oil industry expert at Dresdner Kleinwort Benson in London, puts it: "The hardest thing to do at the moment is to keep the Caspian in perspective. It's an important source of new non-OPEC supply. And it's open to Western companies. But it's not an alternative to the Persian Gulf or even to the North Sea."

But reliable facts about the Caspian are rare as hotel vacancies in Baku. These are some of the few:

--Proven reserves in the Caspian Sea region--that is, oil that has actually been found--currently stand at 17 billion bbl, according to the BP Statistical Review of World Energy.

--Only one modern offshore drilling rig is operating in the Caspian at present. A second is due to commence drilling in September.

--Deals worth $40 billion on paper have been signed by the governments of the two key Caspian states, Azerbaijan and Kazakhstan, with Western oil companies during the past three years.

By 2005, if current trends continue, Western oil companies will be spending about $5 billion a year on exploration and development in the Caspian region. Much will be in the Kashagan area in the shallow, ecologically-sensitive Kazakh waters of the northeast Caspian. Here a consortium led by Royal Dutch Shell has spent four years and $350 million on seismic surveys over a 100,000-sq-km area, discovering more than 50 oil-bearing "prospects." A first well is due to be drilled later this year.

Making sense out of this situation is now an occupation in itself. But certain clear parameters define the Caspian in world terms. On the most unemotional forecasts, oil exports from the region will more than triple to 2.5 million bbl a day in 2005, and rise again to about 3.5 million in 2010.

During this period global demand for oil is forecast to increase about 30%, or 1.5 million bbl a day every year. At most, therefore, Caspian exports will account for some two years increased supply (when rising local demand is also taken into account) and be equivalent in importance in 2010 to middle-ranking Norway's production in early 1998.

No one, however, is sure how much oil there is in and around the Caspian. An informed guess, according to Varzi, is that the Caspian is comparable to the Gulf of Mexico. Clearly, there's a potential for major discoveries; Kazakhstan's giant Tengiz onshore field, with estimated reserves of six to eight billion bbl, is already rated as one of the world's biggest. But most of the offshore Kazakh sector has yet to be drilled. Almost no exploratory work has been done in the Iranian, Turkmen and Russian offshore sectors. And Azerbaijan's deepwater offshore sector is only beginning to be explored.

So why have more than 80 major oil companies from all over the world felt it worthwhile to gamble on the region? First, oil companies are risk takers. Nothing excites them more than a new area, but the Caspian is a new area with a difference; it has a track record of oil finds going back to the last century. Second, the Caspian is a beachhead. Three decades after most Western companies were kicked out of the Persian Gulf, Iran and Iraq, doors are reopening as countries scramble for the technology, investment and expertise they offer. The Caspian region, with its similar history, culture, language and in some cases religion, is a natural route back into the Middle East. Then there is America. "Oil has been a part of geopolitics for a hundred years," remarks Takin. Today it meshes the Clinton Administration's desire to lessen Russian influence in the Caucusus, and US oil companies' increasing need to boost their reserves base.

But the Caspian may never be the oil bonanza its more hysterical boosters suggest. And it's unlikely even to rival the Persian Gulf. But the region does offer a significant alternative to the Middle East. As older non-OPEC sources decline, the Caspian will be there to pick up the slack. It's also friendly to Western governments and eager to do business with all comers. And who knows how much oil and gas the region really holds? Until that becomes clearer, believers in the "wave of money" about to roll across the Caspian will dream on.

Robin Knight is a contributor to TIME and the editorial writer for British Petroleum