PrintThe Caspian Sea region has become a central focal point for untapped oil and natural gas resources from the southern portion of the former Soviet Union.
Beginning in May 2005, oil from the southern sections of the Caspian Sea began pumping through a new pipeline (built by a BP-led consortium) to the Turkish seaport of Ceyhan. The 8-year effort of Western capital, technology, and diplomacy had aimed to decrease reliance on Middle Eastern oil.
Although oil reserve growth in the Caspian region ha s not met levels that had been expected in the 1990s, European countries are paying special attention to the natural gas resources that could lie beneath the Sea as a way to diversify their sources of gas imports.
This report defines the Caspian Sea as an area including the Sea's littoral states of Azerbaijan , Kazakhstan, and Turkmenistan, as well as parts of Russia and Iran. Uzbekistan, although not a littoral state, is the region's largest natural gas producer and is therefore included in the region for the purposes of this analysis.
However, several factors threaten to complicate the region's potential, including a lack of adequate export infrastructure, disagreement over new export routes, and border disputes between the littoral states.
At the moment, the countries of the Caspian Sea region are relatively minor world oil and natural gas producers, struggling with difficult economic and political transitions. Following the collapse of the Soviet Union, the countries’ economies languished as regional trade collapsed. In the last couple years, GDP levels in the primary oil and natural gas producing countries have surpassed levels before independence. Moreover, in the region’s two biggest oil producers, Azerbaijan and Kazakhstan, 46 percent and 26 percent of the populations, respectively, lived below the poverty line in 2005. Improving these conditions depends, in large part, on the successful development of the region's oil and natural gas potential.
Estimates of the Caspian Sea region's proved crude oil reserves vary widely by source. For this reason, EIA estimates proven oil reserves in the region range between 17 and 49 billion barrels, which is comparable to OPEC members Qatar on the low end, and Libya on the high end. In 2006, regional oil production is expected to total 2.3 million bbl/d, comparable to annual production from South America's second largest oil producer, Brazil.
During 2007, EIA expects over 200,000 bbl/d of annual production growth, comprised mostly of growth from Azerbaijan. By 2010, EIA expects the countries of the Caspian Sea Region to produce between 2.9 and 3.8 million bbl/d, which would exceed annual production from South America's largest oil producer, Venezuela.
Sizeable oil production growth has come primarily from the north Caspian states of Kazak hstan and Azerbaijan.
The country briefs for Kazakhstan and Azerbaijan provide a more detailed description of the oil resources at these fields. Development of the region's oil resources has been led by three major projects: Tengiz and Karachaganak (in Kazakhstan), and Azerbaijan's Azeri, Chirag, and deepwater Gunashli (ACG) field.
Combined, these three projects produced an average of 693,000 bbl/d from Jan.-Sep. 2006, roughly 30 percent of the regional total. Development of these decade-old key projects gave rise to an influx of new investment and infrastructure development that constitutes the "second Caspian oil rush," the first having occurred in the late 1800s.
Following these discoveries, major new finds were announced in Azerbaijan at Shah Deniz in 1999 ("total reserves" of roughly 15 Tcf of natural gas and 600 million barrels of condensate), and in Kazakhstan at K
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